Analysing impacts of changing price variability with estimated farm risk-programming models

We formulate and estimate a farm level simulation model of agricultural crop production, and apply it to a scenario with increasing yield variability. The objective function is of the mean-variance utility type with a positive mathematical programming (PMP) cost function, and it is estimated using the optimality conditions and a large panel data set obtained from the FADN. Special attention is given to the problem of separating the effect of the covariance matrix from that of the quadratic PMP terms. The model is applied in a partial analysis of impacts of climate change in Germany by exogenously changing yield patterns.