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Determining Optimal Fertilization Rates Under Variable Weather Conditions

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  • Talpaz, Hovav
  • Taylor, C. Robert

Abstract

This paper presents a theoretical framework for incorporating the following sources of risk into the determination of optimal fertilization rates: (a) the influence of weather and other stochastic factors on the marginal product of fertilizer, and (b) uncertainty about the coefficients of the response function. The decision criterion considered is the maximization of profit subject to a risk constraint on the probability of not recovering the cost of the fertilizer. The theoretical framework is applied to the fertilization of dryland grain sorghum in the Texas Blacklands. Results indicate that the risk averse producer should substantially lower his fertilization rate if soil moisture at fertilization time is low.

Suggested Citation

  • Talpaz, Hovav & Taylor, C. Robert, 1977. "Determining Optimal Fertilization Rates Under Variable Weather Conditions," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 2, pages 1-8, December.
    • Handle: RePEc:ags:wjagec:32333
    DOI: 10.22004/ag.econ.32333
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    File URL: https://ageconsearch.umn.edu/record/32333/files/02010045.pdf
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    References listed on IDEAS

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    1. Lester G. Telser, 1955. "Safety First and Hedging," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 23(1), pages 1-16.
    2. Day, Richard H & Aigner, Dennis J & Smith, Kenneth R, 1971. "Safety Margins and Profit Maximization in the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 79(6), pages 1293-1301, Nov.-Dec..
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    Cited by:

    1. Robison, Lindon J. & King, Robert J., 1978. "Specification of Micro Risk Models for Farm Management and Policy Research," Agricultural Economic Report Series 201245, Michigan State University, Department of Agricultural, Food, and Resource Economics.

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