Integrated optimization of farmland cultivation and fertilizer application: Implications for farm management and food security

• Main Authors: BOYABATLI, Onur, SHAO, Lusheng, ZHOU, Yangfang (Helen)
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2021
• Subjects: Farm planning; agriculture; integrated optimization; fertilizer; yield uncertainty; margin uncertainty; fresh produce; food security; Operations and Supply Chain Management
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/6620; https://ink.library.smu.edu.sg/context/lkcsb_research/article/7619/viewcontent/boyabatli_shao_zhou_R1_31may2023.pdf
• Institution: Singapore Management University

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 crop's open market price, harvesting cost, and farm yield, where yield is stochastically increasing in the fertilizer application rate. We develop a two-stage stochastic program that captures the trade offs facing a farmer growing a commodity crop in a single season to maximize the expected profit. We then use the model to evaluate the expected optimal harvest volume (a measure of food security). Our analytical analysis is complemented with numerical experiments calibrated to data. We characterize how the farmer's optimal decisions, profitability as well as the expected optimal harvest volume are affected by fertilizer and cultivation costs and farm 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 extant literature); specifically when these eects 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 decrease the expected optimal 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 level may backfire.