Crop production structure optimization with considering risk

The effects of global climate change are occurring more and more sharply, and because of it – amongst the indisputable genetic and technological development – the yield fluctuation has increased in the crop production past years. Otherwise, this sector is one of the riskiest, so it is obvious to consider risk during the planning, in the phase of decision preparation. Risk programming models are usually applied in agriculture, which take the attitude of the decision-maker to risk into consideration, i.e. these are utility maximization models. First of all, in case of risk programming models the character of risk must be decided. For determining the degree of risk – among others – dispersion indicators are also suitable. If financial portfolios are optimized, most frequently risk is given by the variance of the portfolio. Variance is also applied in the expected value – variance (E-V) models. If variance is minimized, the model has a quadratic object function. An alternative for variance in the linear programming model is the application of mean absolute deviation (MAD). The purpose of this article is to present the application of a portfolio model for optimizing crop production structure and minimizing risk that is generally used in financial investment calculations."