Risk and economic sustainability of crop farming systems

Summary

Environmental, social and economic attributes are important for the sustainability of a farming system. Comparing farming systems by considering only expected profitability ignores differences in both sustainability and in the riskiness of system returns. Further, in choosing between farming systems, the ability to survive various risks and shocks and con-tinue in the future is important, i.e., system resilience and persistence are important aspects of sustainabil-ity. Yet resilience and persistence have seldom been directly considered in evaluations of economic sus-tainability. A whole-farm stochastic simulation model over a six-year planning horizon was used to compare organic and conventional cropping systems for a representative farm situation in Eastern Norway. The relative sustainability of alternative systems under changing assumptions about future technology and price regimes was examined in terms of terminal financial position. The risk efficiency of the same alternatives was also compared. The results illustrate possible conflicts between pursuit of risk efficiency versus sustainability. The model used could be useful in supporting farmers’ choice between farming sys-tems as well for policy makers to develop more sharply targeted policies.