In the Sultanate of Oman’s coastal region, the Rhodes Grass crop is continuously cultivated. This form of farming had a negative effect on the overall agriculture system and production. Since 2012, the government has prohibited the cultivation of Rhodes grass along the coast and has encouraged farmers to cultivate new agricultural land in Najed. Groundwater tables have sunk to low levels as a result of heavy depletion of groundwater for nine years to irrigate the Rhodes Grass crop and competitive abstraction, resulting in depleted aquifers. At the end of September 2020, the planted area and yield had decreased by 49 percent and 58 percent, respectively, resulting in a total loss of 5.3 million dollars. The aim of the study is to examine the project’s climate and economic viability, as well as to outline the best risk management techniques for increasing project profitability. The study uses a stochastic budgeting approach to assess the government’s intensive fodder crop farming strategies in the face of uncertainty. To represent risk variables and draw NPV probability distributions, the stochastic budgeting simulation model was used. Various reward strategies were assessed and rated based on risk aversion levels. According to the report, providing raw material subsidies for Rhodes Grass cultivation would reduce expected loss probability from 95 percent to 50 percent at Hanfeet farm and from 78.6 percent to 70 percent at Dawkah district, as well as increase the likelihood of achieving an acceptable positive net present value. According to the SERF analysis for the Alfalfa crop, the raw material (RM) subsidy option is the most risk efficient strategy for Dawkah farm, followed by the minimum revenue grantee (MRG) subsidy for Hanfeet farm. At Hanfeet Farm, a Rhodes Grass crop with a raw material subsidy and a minimum revenue grantee is risk effective. According to the findings, the existing capital subsidy strategy is insufficient to reduce risk and ensure long-term viability at Najed locations. Government officials must track and regulate groundwater, measure the cost of each risk management method, and choose the one that will allow agricultural activities to continue.
Author (s) Details
Dr. Kheiry Hassan M. Ishag
Dhofar Cattle Feed Company, P.O.Box 1220, PC 211, Sultanate of Oman.
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