The role of quota in protecting against the risk of production shortfall is investigated. A producer is shown to benefit from being allowed to treat as one all tranches of production quota under his control. Production decisions are invariant to this amalgamation. But when production randomness is additive normal, then the qualitative impact of amalgamation on quota positions depends upon whether the ratio of rental price to the price difference that is being protected exceeds one half. Colin G. Brown A chance constrained programming model is developed to assist Queensland barley growers make varietal and agronomic decisions in the face of changing product demands and volatile production conditions.
Different expectations affect greatly the optimal mix of malting and feed barley activities.
The analysis highlights the suitability of chance constrained programming to this specific class of farm decision problem. This note extends these results to consider the impact of a protein premium and discount system which is not centred on a grower's existing expected protein level. The note suggests that the grower's existing expected protein level plays a crucial role in determining the impact of the system.