An Economic Risk Analysis of Tillage and Cropping Systems on the Arkansas Grand Prairie

Jeffrey A. Hignight, K. Bradley Watkins and Merle M. Anders

No 56354, 2010 Annual Meeting, February 6-9, 2010, Orlando, Florida from Southern Agricultural Economics Association

Abstract: No-till (NT) has been shown to reduce fuel, labor, and machinery costs compared to conventional-till (CT) but very few rice producers in Arkansas practice NT. The low adoption rate is most likely due to difficulties in management but also limited information on the profitability and risk of NT. Most rice producers are knowledgeable on NT costs savings but consider it less profitable due to yield reductions offsetting costs savings. This study evaluates production costs, crop yields, and economic risk of both NT and CT in five rice-based cropping systems (continuous rice, rice-soybean, rice-corn, rice-wheat, and rice-wheat-soybean-wheat). Yields, crop prices, and key input prices are simulated to create net return distributions. Stochastic efficiency with respect to a function (SERF) is used to evaluate profitability and risk efficiency. Results indicate that a risk-neutral and risk-averse producer in either NT or CT would prefer a rice-soybean rotation. NT would be preferred over CT in the rice-soybean rotation across all risk preferences. Overall, risk-neutral producers would prefer NT in four of five cropping systems while risk-averse producers would prefer NT in three of five cropping systems.

Keywords: Crop Production/Industries; Farm Management; Financial Economics; Land Economics/Use; Production Economics; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 22
Date: 2010-01
References: View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:saea10:56354

DOI: 10.22004/ag.econ.56354

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