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ARS Home » Southeast Area » Fort Pierce, Florida » U.S. Horticultural Research Laboratory » Subtropical Plant Pathology Research » Research » Publications at this Location » Publication #311718

Title: Using Monte Carlo simulation to examine the economic cost and impact of HLB

item Taylor, Earl
item Gottwald, Timothy

Submitted to: Plant Disease
Publication Type: Peer Reviewed Journal
Publication Acceptance Date: 2/1/2015
Publication Date: N/A
Citation: N/A

Interpretive Summary: Citrus budgets are examined using Monte Carlo simulation to provide additional insight on the economic impact of HLB on key production decisions. The analysis will highlight and examine key factors driving costs and returns for citrus producers.

Technical Abstract: Crop budgets are a useful and integral tool for producers in making sound business decisions. Although, not without shortcomings. Typically, crop and enterprise budgets are static and examine prices at one point in time. In order to assess changing prices, for inputs and or production, it is typical to examine a range of scenarios – “Best Case”, “Worst Case”, and “Most Likely”. Utilizing Monte Carlo simulation, the static framework associated with budgets can be examined in a dynamic stochastic framework providing more accurate and rigorous analysis for producers. Data from citrus budgets for Florida producers is examined utilizing @Risk to generate Monte Carlo simulations of input and output prices. The stochastic results indicate the relative impacts associated with the respective changes in input and product prices. This frameworks identifies and allows producers to focus on input prices that have the largest impact, both positive and negative, on the firm’s gross and net returns. Additionally, dynamic product prices can provide guidance for producers with respect to establishing pricing targets risk minimizing strategies. The Florida analysis can provide a basis for examination and application for producers in Texas, Arizona, and California to gain insight into the key inputs and the impacts of these input prices. This is of utmost concern for areas that are establishing Citrus Health Management Areas (CHMAs). Dynamic stochastic budget analysis highlights the benefits from controlling input prices on those inputs that have the greatest economic impact on cost and returns.