Modeling Stochastic Crop Yield Expectations with a Limiting Beta Distribution

David Hennessy

Journal of Agricultural and Resource Economics, 2011, vol. 36, issue 01, 15

Abstract: The use of plausible stochastic price processes in price risk analysis has allowed advances not seen in crop yield risk analysis. This study develops a stochastic process for yield modeling and risk management. The Pólya urn process is an internally consistent dynamic representation of yield expectations over a growing season that accommodates agronomic events such as growing degree days. The limiting distribution is the commonly used beta distribution. Binomial tree analysis of the process allows us to explore hedging decisions and crop valuation. The method is empirically flexible to accommodate alternative assumptions on the growing environment, such as intra-season input decisions.

Keywords: Crop; Production/Industries (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Modeling Stochastic Crop Yield Expectations with a Limiting Beta Distribution (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:jlaare:105548

DOI: 10.22004/ag.econ.105548

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