This study investigates the dairy sector in Slovenia, focusing on farm heterogeneity, efficiency in resource utilization, and policy implementations. Through a modeling approach, we explore the ...differences among dairy farms, considering factors such as herd size, farm management, natural conditions, and production potential. Based on 32 typical dairy farms, representing the entire dairy sector, composed of 6400 dairy farms, the analysis was performed using the farm model (SiTFarm). We emphasize the importance of accurate assessments, given the variability of policy impacts across farm types. While medium-to-large, specialized farms dominate milk production, smaller farms, particularly in less favored areas, hold social and environmental importance despite facing competitive challenges. Addressing environmental sustainability could involve promoting practices that improve milk yield and include grazing, as this tends to lower greenhouse gas emissions per kilogram of milk (−5%). Dairy farms contribute about one-third of the generated revenue in Slovene agriculture, of which a good half goes to farms located in less favored areas. They manage a good quarter of permanent grassland in Slovenia, and it is certainly the sector that can achieve the highest return on these areas. In 75% of the farms, the gross margin is higher than 1756 EUR/ha and using best practices they exceed 3400 EUR/ha. The model results indicate that the average hourly rate on dairy farms during the observed period falls within the range of EUR 7.3 to 17.4 of gross margin for most farms, with the top-performing ones exceeding 24 EUR/h. However, due to the significant reliance on budgetary payments (on average, 58% of the gross margin), the implementation of the common agricultural policy strategic plan generally leads to a deterioration in the economic indicators of dairy farms. This impact is particularly pronounced on medium-sized and larger farms, increasing the effect on income due to the substantial fixed costs involved. Our findings underscore the interplay between policy interventions, farm characteristics, and sectoral outcomes, offering valuable insights for policy-makers and stakeholders.
In this study, the resilience of farm production plan through different management adjustments was analyzed. For this purpose, a farm model based on mathematical programming was applied. Through ...organized workshops typical farms focusing on dairy production were defined through qualitative and quantitative classification. Data were obtained from various databases and expert assessments from the agricultural sector. Analysis of resilience was carried out for three of these typical dairy farms. Using the farm model, the production plan of each farm was reconstructed in the first step and then tested for possible deviations from the baseline. Gross margin was used as the main economic indicator. The results show that the typical farms have very different levels of efficiency and potential for improvement. Furthermore, it was found that all farms can achieve significantly higher gross margin only with improved feed quality, which indirectly leads to a lower need for purchased feed and consequently to lower variable costs and higher gross margin. The level of the latter is also significantly affected by the milk yield achieved, especially on larger farms. However, on smaller farms they can improve profitability more significantly by keeping dairy cows on pasture to a greater extent, which results in a reduction in harvesting costs.
Farm-level models have become an important tool for agricultural economists as there is a growing demand for microsimulation and analysis of farms at the individual level.
In this paper, we present a ...mathematical model with the main objective of assessing the effectiveness of production and various possible strategies for agricultural holdings by reducing risks. At the same time, we were also interested in the environmental impacts of such strategies. The latter was measured using the indicator of GHG emissions.
The model applied is based on linear programming and upgraded with QRP for risk analysis. The approach was tested on medium size mixed agricultural holding, which often faces challenges in light of the structural changes taking place in Slovenia.
The results suggest that such a farm could improve financial results with a more efficient risk management strategy. With a slightly modified production plan, the expected gross margin (EGM) can be increased by up to 10% at more or less the same risk. However, if the farmer is willing to diversify the production plan and take a higher risk (+23%), the farm’s EGM could increase by up to 18%. This kind of change in the production plan would also generate 17% more GHG emissions in total, calculated as kg equivalent of CO2 at the farm level, as both BL and C scenarios have the same relative ratio at 3.12 GHG CO2 eq. /EUR.
Through this research, we concluded that diversification has a positive potential on a mixed farm, and the farm could achieve better financial results. With flexibility in management, the farmer could also achieve higher risk management efficiency and better farm results.
In this contribution, the economics of an equestrian centre, which in addition to a variety of riding school activities also includes breeding and livery, are analysed. We consider the conditions for ...a hypothetical holding operating in central Slovenia. Methods of mathematical programming are applied in order to attempt to optimise the holding’s activities. Their use may in the given situation facilitate the evaluation of development prospects from different perspectives and indicate the opportunities of increasing value-added. On the basis of maximizing the gross margin, we try to address the various questions and challenges that arise in managing and planning for such an equestrian centre. The obtained results indicate that breeding is unfavourable in the given price-cost ratio, both for the renewal of the working horses herd and for sale. This reflects the current adverse situation in the field of horse breeding. Livery is an important activity on such holdings and through opportunity perspective provides an optimal set of activities. Activities of the riding school for children are interesting in terms of income diversification, as well as an additional source of revenue. A riding school with one riding instructor and an indoor arena needs 4.6 horses in order to cover the costs of full-time employment.
The increasing and often conflicting challenges that agricultural production systems face today require a more comprehensive approach to planning in the sector, integrating the economic principles of ...production with its social characteristics and ecological impacts. The paper presents an innovative attempt to incorporate biophysical criteria into a standard socio-economic optimisation model, illustrated through a study of the Slovenian dairy sector. The biophysical perspective on the system's functioning is determined by means of emergy analysis. This is an environmental accounting approach which reflects the cumulative environmental support needed to produce a certain output. The eco-centric perspective on the emergy approach complements the standard socioeconomic perspective of value that reflects the utility of a product (anthropocentric perspective). The model is developed based on a preceding analysis of socio-economic and emergy-based performance characteristics of different production types at the farm level that, when aggregated, constitute the sector. The multi-criteria optimisation model is supported by weighted goal programming (WGP) and aims to investigate the effects of two opposing agricultural policy paradigms on the organisation of the sector at the national level. The results show that a protectionist or eco-social focus of public interventions results in the sector's organisation with rather contrasting performance characteristics. The model outcome that represents a compromise between the two agro-political paradigms clearly suggests that incorporation of the emergy criterion into the optimisation model leads to a diverse and balanced structure and a more favourable economic and biophysical performance of the sector. Accordingly, the results confirm the complementarity of economic and emergy approaches and provide implications for a more comprehensive planning of agricultural activity.
•Optimisation model of dairy sector combines socio-economic and emergy criteria•Different economic and policy objectives significantly affect sectoral performance.•Socio-economic and biophysical performance can be improved simultaneously.•Increase in organic production plays a substantial role in the sector's improvement.•Diverse and balanced structure is crucial for resilience and survival of the sector.
Assessment based on representative farms is an established approach in the modern assessment of the effects of changes in agricultural policy. In line with previous CAP reforms, we can expect income ...redistribution impacts also with the implementation of the legislative and financial framework of the CAP for the next period. This paper discusses a scenario analysis using the farm model. The model is based on linear programming, which enables to address various technological challenges at farm level. We formed the scenarios for the analysis following the example of the scenarios contained in the impact assessment that the European Commission prepared for the CAP after 2020. The analysis involves selected farm types from selected sectors. The results suggest that the expected reduction in the envelope will generally lead to lower farm-level revenues from CAP direct payments. Consequently, economic performance will deteriorate, what is likely to be amplified in some sectors by the abolition of historical payments. The range of consequences at farm level will likely be considerable, especially for sectors and production types with a high share of CAP payments in the structure of total farm income. In certain sectors, however, there is even an improvement regarding the current situation.
This article analyses the interactions between agricultural policy measures in the EU and the factors affecting GHG emissions from agriculture on the one hand, and the adaptation of agriculture to ...climate change on the other. To this end, the article uses Slovenia as a case study, assessing the extent to which Slovenian agricultural policy is responding to the challenges of climate change. All agricultural policy measures related to the 2007-2013 programming period were analysed according to a new methodological approach that is based on a qualitative (expert evaluation) and a quantitative (budgetary transfers validation) assessment. A panel of experts reached consensus on the key factors through which individual measures affect climate change, in which direction and how significantly. Data on budgetary funds for each measure were used as weights to assess their relative importance. The results show that there are not many measures in (Slovenian) agricultural policy that are directly aimed at reducing GHG emissions from agriculture or at adaptation to climate change. Nevertheless, most affect climate change, and their impact is far from negligible. Current measures have both positive and negative impacts, but overall the positive impacts prevail. Measures that involve many beneficiaries and more budgetary funds had the strongest impact on aggregate assessments. In light of climate change, agricultural policy should pay more attention to measures that are aimed at raising the efficiency of animal production, as it is the principal source of GHG emissions from agriculture.
Policy relevance
Agricultural policy must respond to climate challenges and climate change impact assessment must be included in the process of forming European agricultural policy. Agricultural policy measures that contribute to the reduction of emissions and adaptation, whilst acting in synergy with other environmental, economic and social goals, should be promoted. The approach used in this study combines qualitative and quantitative data, yielding an objective assessment of the climate impact of agricultural policy measures and providing policy makers with a tool for either ex ante or ex post evaluations of climate-relevant policy measures.
Agriculture is a production system in which the economic principles of organisation act in mutual dependence with its ecological boundaries.
Building on this premise, the paper evaluates performance ...of a chosen agricultural production system (dairy production in Slovenia) from two complementary perspectives, the socio-economic and the biophysical.
The latter is presented by means of emergy analysis, which is a system-based approach that measures the aggregate work of biosphere needed for the provision of goods or services in the units of solar energy joules. The novelty aspect of this paper is the introduction of emergy indicators into the standard socioeconomic optimisation model of the chosen agricultural production system. The optimisation model based on linear mathematical programming is designed to empirically investigate different alternatives to the sector’s reorganisation.
The results of the optimisation models suggest considerable restructuring of the sector and, consequently, large discrepancies in the sector’s performance.
The results suggest that further expansion of organic production systems as a result of a stronger environmental focus in farm management would improve the sector from both, the socio-economic and the emergy perspective. Moreover, even pursuing certain socio-economic targets may improve the sector’s biophysical performance and lower pressure on the local environment.
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