Optimum returns from greenhouse vegetables under water quality and risk constraints in the United Arab Emirates

Authors: FATHELRAHMAN, EIHAB - United Arab Emirates; GHEBLAWI, MOHAMED - United Arab Emirates; MUHAMMAD, SAFDAR - United Arab Emirates; DUNN, EMILY - United Arab Emirates; Ascough Ii, James; Green, Timothy

Submitted to: Sustainability
Publication Type: Peer Reviewed Journal
Publication Acceptance Date: 4/22/2017
Publication Date: 4/29/2017
Citation: Fathelrahman, E.M., Gheblawi, M., Muhammad, S., Dunn, E., Ascough II, J.C., Green, T.R. 2017. Optimum returns from greenhouse vegetables under water quality and risk constraints in the United Arab Emirates. Sustainability. 9(5):719. doi:10.3390/su9050719.

Interpretive Summary: Greenhouses have been used in the United Arab Emirates (UAE) to produce vegetables for food security, including offering fresh vegetable produce in the off-season. However, farmers face both technical and environmental limitations (i.e., high water scarcity) as well as vegetable market price instability. The objective of this study is to explore tradeoffs between economic risks and returns of selected vegetables (tomato, pepper, and cucumber) and an environmental constraint (water salinity) using a unique optimization approach to support the UAE farmer decision making processes. The optimal Target MOTAD solution included all three vegetables with tradeoffs between returns and risks. The analysis confirmed farmer perceptions regarding diversification and salinity constraints based on a survey of 78 producers in the region. Reduction in tomato production should be offset by an increase in cucumber production while maintaining a constant level of pepper production. The results demonstrated the importance of the water salinity environmental constraint, and the optimal solution was highly sensitive to changes in the crop water salinity constraint. Therefore, a decision-maker in the UAE can maximize gross margin (total revenue – variable costs) considering economic risk and water quality constraints to find the optimal vegetable product mix under greenhouse conditions.

Technical Abstract: Greenhouses have been used in the United Arab Emirates (UAE) to produce vegetables that contribute toward UAE food security, including offering fresh vegetable produce in the off-season. However, to manage such greenhouses farmers face both technical and environmental limitations (i.e., high water scarcity) as well as vegetable market price instability. The objective of this study is to explore tradeoffs between returns (i.e., gross margin) of selected vegetables (tomato, pepper, and cucumber), risk (deviation from gross margin means) and an environmental constraint (water salinity) using a unique Target MOTAD (Minimization of Total Absolute Deviations) approach to support the UAE farmer decision making processes. The optimal Target MOTAD solution included all three vegetables and no corner solution. The results showed tradeoffs between returns and risks, and confirmed that product diversification reduces overall risk. The analysis was consistent with farmer perceptions based on a survey of 78 producers in the region. The search for the optimal mix of vegetable production under UAE greenhouse conditions revealed that reduction in tomato production should be offset by an increase in cucumber production while maintaining a constant level of pepper production. In other words, risk is reduced as cucumber production increases due to the high level of tomato and lettuce price volatility as the alternative to cucumber. The results also demonstrated the importance of the water salinity environmental constraint as it was found to have a positive marginal value in the optimal vegetable mix solution (i.e. important factor). Thus the optimal solution was highly sensitive to changes in the crop water salinity constraint. The study results also demonstrate that the Target MOTAD approach is a suitable optimization methodology. As a practical approach, a decision-maker in the UAE can consider gross margin (total revenue – variable costs) maximization with risk and water quality constraints to find the optimal vegetable product mix under greenhouse conditions.