EFFICIENCY OF RISK REDUCTION ON SLOVENIAN LIVESTOCK FARMS: WHOLE-FARM PLANNING APPROACH

This paper deals with whole farm planning problem under stochastic conditions caused by production and price risk. Exposition to risk and efficiency of risk reduction was studied on five livestock farms in Slovenia. For this purpose linear and quadratic risk programming modeling paradigm has been applied. Linear program assumes that farmer maximizes expected gross margin subject to a set of constraints related to farm's limited resources, while quadratic risk programming is based on E,V efficient rule, minimizing total variance. Risk performance of livestock case farms has been analyzed in E-V efficient set. Efficiency of diversification strategies for all farms has been estimated with risk gradient value.