Farm-Specific Risk Analysis in Dairy Farming: A Case Study from Turkey

The purposes of this study were to determine the socio-economic characteristics of dairy farmers in Antalya, in Turkey, calculate the gross income, variable costs and gross margin of dairy farms, determine the probability distributions of consequences for alternative decisions to enable dairy farmers as decision makers to make a good and well-informed choice, to determine cross effects of milk prices variations on the productive strategy of dairy farms. The data were gathered via face to face interviews in Korkuteli, Dosemealtı, Elmalı, Manavgat and Serik counties of Antalya province in Turkey. The survey study was conducted with 80 farmers, who were member of Dairy Cow Breaders Union, in the 2011 production period. In this study, on the basis of previous experience, dairy farmers assigned minimum, maximum and most likely values of milk price and yield over the next period of 5 years. Then, triangular and cumulative distributions were defined by using these values. Moreover, Monte Carlo Stochastic Simulation model was developed to obtain distribution of expected gross margin per cow. The model and triangular and cumulative distributions were built in Excel with @Risk add-in software. The relationship of mean risk aversion coefficient, calculated by using negative exponential function, with both average gross margin and gross margin standard deviation values determined for each farm was examined. The results show that the relation between average gross margin and mean risk aversion coefficient was negative and significant at 5% level. But, although the relation between gross margin standard deviation and mean risk aversion coefficient was found to be negative, it was not significant at 5% level.