Maintaining Agricultural Production Profitability—A Simulation Approach to Wheat Market Dynamics

Agnieszka Bezat-Jarzębowska (), Włodzimierz Rembisz and Sebastian Jarzębowski
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Agnieszka Bezat-Jarzębowska: Department of Agricultural Markets and Quantitative Methods, Institute of Agricultural and Food Economics, 20 Swietokrzyska Street, 00-002 Warsaw, Poland
Włodzimierz Rembisz: Department of Agricultural Markets and Quantitative Methods, Institute of Agricultural and Food Economics, 20 Swietokrzyska Street, 00-002 Warsaw, Poland
Sebastian Jarzębowski: Department of Economics, Kozminski University, 57/59 Jagiellonska Street, 03-301 Warsaw, Poland

Agriculture, 2024, vol. 14, issue 11, 1-20

Abstract: Profitability is a complex notion, intertwined with theoretical, socio-economic, and modern economic considerations. While traditionally linked to monopoly advantages, contemporary views broaden this to include shareholder value creation. In agriculture, profitability faces impediments such as rising input costs, market volatility, and economic disparities, emphasizing technological innovation, market conditions, and policy as crucial determinants. This study presents an econometric simulation model to analyze and forecast wheat production profitability in Poland from 2023 to 2027, providing insights into production efficiencies, market dynamics, and policy impacts. Using a system of recursive equations, the model forecasts profitability, integrating econometric techniques with expert insights. It examines variables like resource use, production levels, and price changes, validated through FADN data. The findings reveal that price relations and production efficiencies are the key to profitability. The model highlights market volatility, particularly through “price scissors”, as the main factor influencing profitability. Favorable price conditions significantly boost profitability and incentivize production. The model is a critical tool for analyzing wheat profitability, highlighting the influence of market and policy changes. Future work could extend the model’s use to other regions or crops, incorporating advanced technologies to improve accuracy. This study offers valuable insights for agricultural economics, aiding stakeholders in strategic decision-making.

Keywords: profitability change; simulation model; wheat market (search for similar items in EconPapers)
JEL-codes: Q1 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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