Risk Efficient Resource Allocation in Agricultural Systems of Pakistan: A Farm Level Analysis (W-36)

Risk Efficient Resource Allocation in Agricultural Systems of Pakistan: A Farm Level Analysis (W-36)

Publication details

  • Saturday | 01 Aug, 1998
  • Shahid M. Zia
  • Working Papers
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Shahid M. Zia 1998

Abstract

This paper develops farm plans that can ensure optimal utilization of available farm resources for a given level of risk. In general, farm-planning models generate a large set of farm plans. Farmers can choose the plan that suits their production environment and is congruent with their attitude towards risk. To make the decision-making process easy for the farmers, this paper attempts to reduce the decision space that risk-programming models generate. It uses compromise-programming techniques together with risk planning methods for developing the best compromise farm plans. Compromise farm plans furnish very useful information on resource allocation and risk. Through the present extension networks, the model can be applied to improve resource use efficiency. It can also be utilized for assessing environmental costs in agriculture with little adaptation. Agriculture in Pakistan is entering a new era of commercialization.

In commercial agriculture, farm managers need to base their resource allocation decisions on a combination of information on production technology and its financial implications. It becomes all the more important to know the strengths and potential weaknesses of farm business for better farm planning. It is generally noticed that with the growing complexities of farm business, coupled with increased use of capital in agriculture, the farmers realize the tremendous need for assistance in enterprise planning and farm resource management in order to achieve better efficiency and to reduce production risk. To assist farmers in evaluating and planning their business, mathematical programming techniques are widely used.