PR - EQUESTRIAN ACTIVITIES AND RISK ANALYSIS AT THE FARM LEVEL

Abstract:
This paper deals with equestrian-farm planning problem under stochastic conditions caused by price and cost risk. Exposition to risk and eventual efficiency on risk reduction in horse industry is studied on a hypothetical farm oriented in horseback riding, livery and breeding. We analyse how different set of those activities on a holding could influence risk management and especially where the main challenges are in production planning in the sense of optimal allocation of resources as well as which activities to select to (i) reduce risk or (ii) at given level of risk achieve better economic result.

For this purpose module-tool has been developed based on linear and quadratic risk programming approaches. Linear program serves to prepare optimal production plan maximizing expected gross margin, assuming that farmer is risk averse, while the second approach is based on E-V efficient rule, minimizing total variance as a measure of risk. Results point on important set of activities in horseback riding schools that besides significant improvement of gross margins reduce total risk at farm level.

Key words: riding school, livery, risk modelling, horse breeding