Publication Type
Journal Article
Version
submittedVersion
Publication Date
6-2021
Abstract
Motivated by the fresh produce industry, this paper studies a farmer’s joint cultivation and fertilizer (a representative farm input) application decisions facing uncertainties in yield, crop price, and harvesting cost where the latter two are yield dependent and yield is stochastically increasing in the fertilizer application rate. We develop a two-stage stochastic model of a farmer growing a commodity crop in a single season to maximize the expected profit. We then use the model to evaluate the optimal expected harvest volume (a measure of crop production). Our analytical analysis is complemented with numerical experiments calibrated to data. We characterize how the farmer’s optimal decisions, profitability as well as the optimal expected harvest volume are affected by fertilizer and cultivation costs and yield uncertainty. We find that these effects can be counterintuitive and significantly different from those when only cultivation decision is optimized (as considered in the literature); specifically when these effects induce the farmer to change the two decisions in opposite directions. For example, an increase in fertilizer cost may incent the farmer to cultivate more farmland. Another example is that a reduction in cultivation cost or yield variability may not increase the optimal expected harvest volume. This result is useful for policymakers as it demonstrates that commonly used policies in practice, such as distributing discount vouchers for seed procurement (which reduces the cultivation cost) or increasing the availability of disease-resistant seeds (which reduces yield variability) that have been devised for increasing crop production may not be effective.
Keywords
Farm planning, agriculture, integrated optimization, fertilizer, yield uncertainty, price uncertainty, open market, fresh produce, food security, harvesting
Discipline
Operations and Supply Chain Management
Research Areas
Operations Management
First Page
1
Last Page
76
Embargo Period
1-5-2021
Citation
BOYABATLI, Onur; SHAO, Lusheng; and ZHOU, Yangfang (Helen).
Integrated optimization of farmland cultivation and fertilizer application: Implications for farm management and crop production. (2021). 1-76.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/6620
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.