Decision models for livestock production in Uruguay

Vita.The agricultural sector of Uruguay has been faced with the problems of low productivity and non adoption of production increasing technologies by producers. Previous research in Uruguay suggested that the use of available techniques would result in increased production. Moreover, the adoption of improved technologies in livestock production resulted in substantial increases in profits at the producer level. Based on these findings this research had the following objectives: (1) to evaluate the aggregate economic impact of widespread use of improved technologies for three main livestock producing zones of the country; and (2) to evaluate the role of risk in the decision making process of individual producers in a northern livestock producing zone, especially as it relates to the adoption of new technologies. Sources of risk considered in this model were variations in the price of inputs, output price variation and forage yield variability. To fulfill the first objective an aggregate linear programming model was built for the three zones under study. To accomplish the second objective, a quadratic programming model was used to incorporate risk into the decision making process of individual producers. Results indicated that the country would improve its balance of trade position substantially by shifting to improved conditions in the three zones studied. The difference between additional exports and additional import requirements could be as high as 132 billion pesos (150 million dollars) when all three zones shifted to improved conditions. Also, returns to producer would increase substantially if the change to improved conditions took place.