Integrated Optimization of Farmland Cultivation and Fertilizer Application: Implications for Farm Management and Food Security

Onur Boyabatlı, Lee Kong Chian School of Business, Singapore Management University

Abstract

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 both the crop's profit margin 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 single crop in a single season to maximize the expected profit. We then use the model to evaluate the effectiveness of various policy interventions in increasing the expected harvest volume (a measure of food security). Our analytical analysis is complemented with numerical experiments calibrated to data. We characterize how the optimal decisions as well as the resulting expected harvest volume are affected by (fertilizer and cultivation) costs and (profit margin and yield) uncertainties. We find that these effects can be counterintuitive due to joint optimization; specifically when they 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 well-intended policy intervention that reduces the cultivation cost or yield variability may backfire and decrease the expected harvest volume. Our findings have both important managerial implications as they provide rules of thumb for a farmer in jointly adapting cultivation and fertilizer application decisions as a response to changes in the business environment, and important policy insights as they shed light on the effectiveness of interventions in increasing crop production to alleviate food insecurity.Joint work with Lusheng Shao (Faculty of Business and Economics, The University of Melbourne) and Yangfang (Helen) Zhou, Lee Kong Chian School of Business, Singapore Management University.

Short Bio

Onur Boyabatli is Associate Professor of Operations Management and DBS Sustainability Fellow at the Lee Kong Chian School of Business, Singapore Management University. He holds a Ph.D. in Technology and Operations Management from INSEAD, France, M.S. and B.S. degrees in Industrial Engineering from Bilkent University, Turkey. His main research interests are in the areas of integrated risk management in global supply chains, operational decision making in commoditized industries with a special focus on agribusiness, technology and capacity management under financing frictions, supply chain finance and sustainable operations. His research papers have been published in Management Science and Manufacturing & Services Operations Management (M&SOM) journals. He is the co-editor of “Agricultural Supply Chain Management Research - Operations and Analytics in Planting, Selling, and Government Interventions” and “Handbook of Integrated Risk Management in Global Supply Chains.” He is currently serving as the Chair for iFORM (Interface of Finance, Operations and Risk Management) Special Interest Group. He has served as an Associate Editor for the M&SOM journal between 2019 and 2021. He was awarded the M&SOM journal’s Meritorious Service Award in 2016, 2017 and 2018; Management Science journal’s Distinguished Service Award in 2012 and Meritorious Service Award in 2014. He was selected for “Most Influential Business Professors under 40” By Singapore Business Review in 2016. He teaches courses related to Operations Management (e.g., Decision Analysis, Risk Management in Global Supply Chains, Supply Chain Innovation, and Sustainability) at various---executive, graduate (DBA, MscInn, MBA, and PhD) and undergraduate---levels.

Venue

Friday, January 14, 2022, 4.00 pm - Zoom Meeting