Economic risk assessment of the quality labels and productive efficiency strategies in Spanish extensive sheep farms

CONTEXT: The socio-economic decline of extensive sheep farming caused by its low profitability in southern European Union (EU) regions threatens marginal depopulated rural areas' survival. In the face of new future institutional and climate challenges, there appears to be an urgent need for strategies to improve economic performance. OBJECTIVE: This paper aims to evaluate the economic performance and risk of two alternative demand-oriented and productive efficiency strategies: i) protected geographical indication certification, and ii) increased ewe reproduction prolificacy. Method: Based on regional farm records and price data and a survey of 54 local farmers, we formulated a sto-chastic gross margin model to simulate and analyze four strategic scenarios (baseline, quality labelling, pro-ductive efficiency, and joint strategies) under two specific stressors, namely decreased lamb prices and increased feeding costs. RESULTS AND CONCLUSIONS: We found that feeding costs constitute the main risk factor, whereas price instability has less influence. Our findings highlight improvements in performance under a quality scenario,albeit with higher vulnerability to price variability with respect to the baseline scenario. In contrast, the productive efficiency scenario performs much better in terms of average gross margin and reduced vulnerability to feeding costs, albeit with a larger variation for the expected outcomes. SIGNIFICANCE: The paper casts light on the vulnerability of the quality label under price risk, and suggests the potential for the joint implementation of both quality production and productive efficiency strategies, which could compensate for their respective weaknesses.

Automated summary

The study shows that reducing feeding costs is the main risk factor, while price instability has less impact. Performance under a quality scenario improves, but with higher vulnerability to price variability compared to the baseline scenario. On the other hand, the productive efficiency scenario performs better in terms of average gross margin and reduced vulnerability to feeding costs, albeit with greater variation in expected outcomes.