IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v12y2020i19p7891-d418283.html
   My bibliography  Save this article

Comparison of Long-Run Net Returns of Conventional and Organic Crop Rotations

Author

Listed:
  • Michael R. Langemeier

    (Department of Agricultural Economics, Purdue University, West Lafayette, IN 47907, USA)

  • Xiaoyi Fang

    (Department of Agricultural Economics, Purdue University, West Lafayette, IN 47907, USA)

  • Michael O’Donnell

    (Purdue Extension, Purdue University, West Lafayette, IN 47907, USA)

Abstract

This study compares the long-run net returns to land of conventional corn/soybean and corn/soybean/wheat crop rotations to that of an organic corn/soybean/wheat crop rotation. The net returns to land for the organic crop rotation were found to be approximately $68 and $74 per acre higher than those of the conventional corn/soybean and conventional corn/soybean/wheat crop rotations, respectively. Average net return estimates are sensitive to price, yield, and cost assumptions. Organic crop prices would have to drop more than 17.8 percent and organic crop yields would have to drop more than 16.8 percent before the conventional corn/soybean crop rotation was more profitable than the organic corn/soybean/wheat crop rotation. These percentage changes are relatively small compared to the historical relationships between organic and conventional crop prices and yields. A risk model was used to examine the trade-off between expected net returns and downside risk. Converting even a small proportion of acreage to an organic corn/soybean/wheat crop rotation improves net returns and reduces downside risk compared to only utilizing conventional crop rotations.

Suggested Citation

  • Michael R. Langemeier & Xiaoyi Fang & Michael O’Donnell, 2020. "Comparison of Long-Run Net Returns of Conventional and Organic Crop Rotations," Sustainability, MDPI, vol. 12(19), pages 1-7, September.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:19:p:7891-:d:418283
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/12/19/7891/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/12/19/7891/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. McBride, William D. & Greene, Catherine & Foreman, Linda & Ali, Mir, 2015. "The Profit Potential of Certified Organic Field Crop Production," Economic Research Report 262208, United States Department of Agriculture, Economic Research Service.
    2. Greene, Catherine & Vilorio, Dennis, 2018. "Lower Conventional Corn Prices and Strong Demand for Organic Livestock Feed Spurred Increased U.S. Organic Corn Production in 2016," Amber Waves:The Economics of Food, Farming, Natural Resources, and Rural America, United States Department of Agriculture, Economic Research Service, vol. 0(05), June.
    3. Peterson, Hikaru Hanawa & Barkley, Andrew P. & Chacon-Cascante, Adriana & Kastens, Terry L., 2012. "The Motivation for Organic Grain Farming in the United States: Profits, Lifestyle, or the Environment?," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 44(2), pages 1-19, May.
    4. McBride, William & Greene, Catherine, 2015. "Despite Profit Potential, Organic Field Crop Acreage Remains Low," Amber Waves:The Economics of Food, Farming, Natural Resources, and Rural America, United States Department of Agriculture, Economic Research Service, issue 10, pages 1-1, November.
    5. Wilson, Roger, 2016. "2016 Nebraska Crop Budgets," Cornhusker Economics 306953, University of Nebraska-Lincoln, Department of Agricultural Economics.
    6. Myles J. Watts & Larry J. Held & Glenn A. Helmers, 1984. "A Comparison of Target MOTAD to MOTAD," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 32(1), pages 175-186, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pérez-Mesa, Juan Carlos & Pérez-Mesa, Fº Javier & Tapia-León, Juan José & Valera-Martínez, Diego, 2022. "Scheduling vegetable sales to supermarkets in Europe: The tomato case," MPRA Paper 119883, University Library of Munich, Germany.
    2. Langemeier, Michael & Michael O’Donnell,, . "Conventional and Organic Enterprise Net Returns," farmdoc daily, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics, vol. 10(161).
    3. Juan Carlos Pérez-Mesa & Francisco Javier Pérez-Mesa & Juan José Tapia-León & Diego Luis Valera, 2022. "Scheduling vegetable sales to supermarkets in Europe: The tomato case," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 68(11), pages 403-412.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. McDonald, James M. & Law, Jonathan & Mosheim, Roberto, 2020. "Consolidation in U.S. Dairy Farming," Economic Research Report 303971, United States Department of Agriculture, Economic Research Service.
    2. Marion Desquilbet & Bruno Dorin & Denis Couvet, 2016. "Land Sharing vs Land Sparing to Conserve Biodiversity: How Agricultural Markets Make the Difference [land-sharing/land-sparing, comment les marchés font la différence]," Post-Print hal-03948463, HAL.
    3. F. Kuchler & M. Bowman & M. Sweitzer & C. Greene, 2020. "Evidence from Retail Food Markets That Consumers Are Confused by Natural and Organic Food Labels," Journal of Consumer Policy, Springer, vol. 43(2), pages 379-395, June.
    4. Kalaitzandonakes, Nicholas & Lusk, Jayson & Magnier, Alexandre, 2018. "The price of non-genetically modified (non-GM) food," Food Policy, Elsevier, vol. 78(C), pages 38-50.
    5. Dru Montri & Kimberly Chung & Bridget Behe, 2021. "Farmer perspectives on farmers markets in low-income urban areas: a case study in three Michigan cities," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 38(1), pages 1-14, February.
    6. Beatrice Dingha & Leah Sandler & Arnab Bhowmik & Clement Akotsen-Mensah & Louis Jackai & Kevin Gibson & Ronald Turco, 2019. "Industrial Hemp Knowledge and Interest among North Carolina Organic Farmers in the United States," Sustainability, MDPI, vol. 11(9), pages 1-17, May.
    7. Baker, Brian & Russell, June, 2016. "Capturing a Value-Added Niche Market: Articulation of Local Organic Grain," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 252706, Agricultural and Applied Economics Association.
    8. Glenn, Viola & Dale, Kelli & Sligh, Michael & Robinson, James, 2014. "Examining Adverse Selection in Organic Crop Insurance: Where Do We Go From Here?," 2014 AAEA: Crop Insurance and the 2014 Farm Bill Symposium: Implementing Change in U.S. Agricultural Policy, October 8-9, 2014, Louisville, KY 184264, Agricultural and Applied Economics Association.
    9. Ahearn, Mary Clare & Armbruster, Walt & Young, Robert, 2016. "Big Data's Potential to Improve Food Supply Chain Environmental Sustainability and Food Safety," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 19(A), pages 1-18, June.
    10. Keenan, Michael & Karanja, Stanley & Pamuk, Haki & Ruben, Ruerd, 2021. "Smallholder Farming Households' Make-or-Buy Decisions: Linking Market Access, Production Risks, and Production Diversity to Dietary Diversity," 2021 Conference, August 17-31, 2021, Virtual 315349, International Association of Agricultural Economists.
    11. Carlson, Andrea & Greene, Catherine & Raszap Skorbiansky, Sharon & Hitaj, Claudia & Ha, Kim & Cavigelli, Michel & Ferrier, Peyton & McBride, William, 2023. "U.S. Organic Production, Markets, Consumers, and Policy, 2000-21," USDA Miscellaneous 333551, United States Department of Agriculture.
    12. Nuray Cakirli Akyüz & Ludwig Theuvsen, 2020. "The Impact of Behavioral Drivers on Adoption of Sustainable Agricultural Practices: The Case of Organic Farming in Turkey," Sustainability, MDPI, vol. 12(17), pages 1-20, August.
    13. Daniel Hellerstein & Catherine Greene & Maria Bowman, 2017. "Symphony of the Soil [documentary]. Directed, produced, and written by Deborah Koons. Lily Films. 2012," American Journal of Agricultural Economics, John Wiley & Sons, vol. 99(3), pages 840-842, April.
    14. McCamley, Francis & Kliebenstein, James B., 1986. "Necessary Conditions For Dsd Efficiency Of Mixtures Of Risky Alternatives," 1986 Annual Meeting, July 27-30, Reno, Nevada 278149, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    15. Nguyen Cong Dinh & Takeshi Mizunoya & Vo Hoang Ha & Pham Xuan Hung & Nguyen Quang Tan & Le Thanh An, 2023. "Factors influencing farmer intentions to scale up organic rice farming: preliminary findings from the context of agricultural production in Central Vietnam," Asia-Pacific Journal of Regional Science, Springer, vol. 7(3), pages 749-774, September.
    16. Jelili Adegboyega Adebiyi & Laura Schmitt Olabisi & Robert Richardson & Lenis Saweda O Liverpool-Tasie & Kathleen Delate, 2019. "Drivers and Constraints to the Adoption of Organic Leafy Vegetable Production in Nigeria: A Livelihood Approach," Sustainability, MDPI, vol. 12(1), pages 1-21, December.
    17. Han, Guang & Arbuckle, J. Gordon & Grudens-Schuck, Nancy, 2021. "Motivations, goals, and benefits associated with organic grain farming by producers in Iowa, U.S," Agricultural Systems, Elsevier, vol. 191(C).
    18. Helmers, Glenn A. & El-Otsa, Hisham & Langemeier, Michael R. & Morrill, John M., 1986. "A,Risk-Income Analysis of Crop Variety Selection," 1986 Annual Meeting, July 27-30, Reno, Nevada 278036, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    19. Raszap Skorbiansky, Sharon & Adjemian, Michael K. & Saitone, Tina L. & Sexton, Richard J., 2017. "Price Determination and Margin Volatility in Thinly Traded Commodity Markets: An Application to Major U.S. Field Crops," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258577, Agricultural and Applied Economics Association.
    20. Langemeier, Michael, . "Conventional and Organic Enterprise Net Returns," farmdoc daily, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics, vol. 11(140).

    More about this item

    Keywords

    organic crops; net returns; risk;
    All these keywords.

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:12:y:2020:i:19:p:7891-:d:418283. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.