ARE FUNGICIDES, NITROGEN AND PLANT GROWTH REGULATORS RISK‐REDUCING? EMPIRICAL EVIDENCE FROM SWISS WHEAT PRODUCTION

Uri Regev, Nikolaus Gotsch and Peter Rieder

Journal of Agricultural Economics, 1997, vol. 48, issue 1‐3, 167-178

Abstract: The importance of short‐run risk in Swiss wheat production is explored empirically by using the moment‐based approach. Marginal contributions of controlled and uncontrolled inputs to revenue variance are estimated and then used to test the hypotheses that chemical pesticides and nitrogen are risk increasing. Fungicides are shown to have a statistically significant risk‐increasing effect on revenue at low levels of rainfall. There is no conclusive evidence that nitrogen and plant growth regulators are either risk‐reducing or risk‐increasing. Comparison of conventional and organic wheat growers shows that while yield variance is lower, revenue variance is higher for conventional growers. This is because the latter are protected from market risks by guaranteed prices, while prices of organic wheat fluctuate highly. This result supports the hypothesis that chemical pesticides and nitrogen may be risk‐increasing inputs, at least in some circumstances.

Date: 1997
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