Toolkit improvement at the farm level (ECORUM) by integrating price variability

Abstract

In the agricultural sector, estimation of future prices for products and inputs has always been a ‘baffling’ problem in the sense that their evolution depends on multiple uncertain events related to climate, social, and economic changes. These changes can occur suddenly for a short period or induce medium or long changes in future prices. So, as mentioned by Price Gittinger (1985), estimation of the future prices results more from a judgment on the potential events than a ‘mechanic’ reasoning. However, estimation of the future price is essential in economic to be able to assess future trends for the financial or economic viability of farm systems (and then households) and to be able to plan investments or to elaborate strategic policies in agriculture. This short note proposes to review the different approaches regarding the prevision of prices and to discuss alternatives to consider the price variability in the ECORUM excel tool within the LSIPT toolkit. A new version of ECORUM (Excel file) is attached.