An integrated planning model for a farm with an adjoining woodlot
The study deals with medium-term economic planning for a multi-branched farm enterprise on which agriculture and forestry plus associated livelihoods are practiced. A personal enterprise consisting of the earning economy sphere of an individual person or family is found to provide a suitable point of departure and framework for farm enterprise planning. In this case, the consumer economy cash withdrawals of the entrepreneur and members of his family are linked to the planning model. In a combined planning model of this type serving the management of the agricultural entrepreneur’s entire economy, the problems of both the real process (chiefly pertaining to agriculture and forestry) and the financial process are solved simultaneously and optimally with regard to the goal function, taking into consideration the model’s production factor, financing, taxation and other such constraints. The model also takes into account the possibility of investing money in financial targets (e.g. governments bonds and stocks).
The study consists of constructing a multi-periodic, combined planning model in the form required by linear optimization. The model is applied to the economic planning of a farm and its adjoining woodlot located in south-western Finland. In order to simplify the presentation of the matter, the case calculation is made to apply to a planning period only two years; the time span in the formulae used in the model is actually ten years. For the same reason, the number of treatment alternatives for the stands in the woodlot may appear to be unrealistically small.
Within the planning period the model does not require the use of the calculation rate of interest typical of partial models; instead, it itself provides the solution to where to invest and what the financing costs will be. An essential feature of the model is that the plan for the entire farm is not compiled by adapting to one another the plans made separately for farming, forestry etc., and financing; instead, the entire real process and financial process plan are obtained as the solution for the model.
The PDF includes a summary in Finnish.
Published in 1992