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Enhancing Farm Profitability through Portfolio Analysis: The Case of Spatial Rice Variety Selection

Author

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  • Nalley, Lawton Lanier
  • Barkely, Andrew
  • Watkins, Brad
  • Hignight, Jeffrey A.

Abstract

This study applies portfolio theory to rice varietal selection decisions to find profit maximizing and risk minimizing outcomes. Results based on data from six counties in the Arkansas Delta for the period 1999–2006 suggest that sowing a portfolio of rice varieties could have increased profits from 3 to 26% (depending on the location) for rice producers in the Arkansas Delta. The major implication of this research is that data and statistical tools are available for rice producers to improve the choice of rice varieties to plant each year in specific locations. Specifically, there are large potential gains from combining varieties that are characterized by inverse yield responses to growing conditions such as drought, pest infestation, or the presence of a specific disease.

Suggested Citation

  • Nalley, Lawton Lanier & Barkely, Andrew & Watkins, Brad & Hignight, Jeffrey A., 2009. "Enhancing Farm Profitability through Portfolio Analysis: The Case of Spatial Rice Variety Selection," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 41(3), pages 1-12, December.
    • Handle: RePEc:ags:joaaec:56650
    DOI: 10.22004/ag.econ.56650
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    Cited by:

    1. Codjo, O.S. & Fiamohe, R. & Kpenavoun, S. & Acclassato, D. & Biaou, G., 2018. "Application of Portfolio and Stochastic Simulation Analysis for a Decision of Governance Structures Choice of Benin s Rice Producers," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277145, International Association of Agricultural Economists.
    2. Steven C. Blank & Danny Klinefelter, 2012. "Keeping ARMS relevant: increasing its usability," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 72(2), pages 222-232, July.
    3. repec:ags:cfcp15:344235 is not listed on IDEAS
    4. Bodin, P. & Olin, S. & Pugh, T.A.M. & Arneth, A., 2016. "Accounting for interannual variability in agricultural intensification: The potential of crop selection in Sub-Saharan Africa," Agricultural Systems, Elsevier, vol. 148(C), pages 159-168.
    5. Watkins, K. Bradley & Henry, Chris G. & Hardke, Jarrod T. & Mane, Ranjitsinh U. & Mazzanti, Ralph & Baker, Ron, 2021. "Non-radial technical efficiency measurement of irrigation water relative to other inputs used in Arkansas rice production," Agricultural Water Management, Elsevier, vol. 244(C).
    6. Watkins, K. Bradley & Henry, Christopher G. & Mazzanti, Ralph & Schmidt, Lance & Hardke, Jarrod T., 2014. "Non-Radial Technical Efficiency of Water and Nitrogen Usage in Arkansas Rice Production," 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas 162593, Southern Agricultural Economics Association.
    7. Mishenin, Yevhen & Marekha, Iryna & Yarova, Inessa & Kovalova, Olha & Pizniak, Tetiana, . "Optimizing a portfolio of agri-environmental investments," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 8(01).
    8. Mortenson, Ryan & Parsons, Jay & Pendell, Dustin L. & Haley, Scott D., 2012. "Wheat Variety Selection: An Application of Portfolio Theory in Colorado," Western Economics Forum, Western Agricultural Economics Association, vol. 11(2), pages 1-12.
    9. Samuel D. Zapata & Xavier Villavicencio & Anderson Xicay, 2024. "A statistical learning approach to pasture, rangeland, forage (PRF) insurance coverage selection," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 46(4), pages 1429-1449, December.
    10. Watkins, K. Bradley & Hristovska, Tatjana & Mazzanti, Ralph & Wilson, Charles E., Jr., 2013. "Measuring Technical, Allocative, and Economic Efficiency of Rice Production in Arkansas using Data Envelopment Analysis," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida 142962, Southern Agricultural Economics Association.
    11. Diersen, Matthew & Gurung, Pratik & Fausti, Scott, "undated". "Optimal Allocation of Index Insurance Intervals for Commodities," 2015 Annual Meeting, January 31-February 3, 2015, Atlanta, Georgia 196793, Southern Agricultural Economics Association.
    12. Alulu, Joseph & Muendo, Kavoi & Mbeche, Robert & Mithöfer, Dagmar, 2024. "Seed innovations and performance of African indigenous vegetables producers: Evidence from Kenya," IAAE 2024 Conference, August 2-7, 2024, New Delhi, India 344235, International Association of Agricultural Economists (IAAE).

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    Keywords

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    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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