An Excel Based Stochastic LP Model for a Dairy and Meat Farm
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This paper describes a stochastic linear programming model for farms with a milk and cattle meat production system. This model documentation is worked out using the farm account records for three family farms in Northern Norway. The model is built in Excel using the addin Simetar to analyze risks. The LP model maximizes farm gross margins but the fixed costs of each farm are subtracted in order to compute farm profit and risk in farm profit. Data for the 15 years from 1991 2005 from the farms and from the annual editions of the Handbook of farm planning (NILF, 2000) have been used as a basis for developing the stochastic variables. The following variables have been made stochastic: area and yield of green fodder, yields of leys and pastures, yield of milk per cow, meat price, milk price, fuel costs and costs of concentrate feed. The rate of interest is also made stochastic. In the model the rate of interest is affecting the risk in farm profit through the fixed costs. Emphasize has been given to build a flexible model allowing for examining effects of changes in several ways e.g. length of grazing period, calving time, or harvesting method for grass. The milk production is restricted by a farm specific milk quota, but otherwise the farming intensity is varied as farmers may choose selling e.g. small calves or up to two years old castrates with extensive use of pasture. Updating the model with data for another year is facilitated by defining prices for one year at a time and by cell referencing all variables. The records may be replaced with records for family farms with similar production systems in other areas in the country. The production is based on grass and pasture roughage. Dairy farms in more central areas also produce cereals, grain and oilseeds and the model has to be developed further for such farms. The model will be used to carry out different farm economics analysis for Norwegian family farms combining milk and cattle meat production in production systems involving extensive use of pasture.