Impacts of Crop Rotation on Corn Yields and Production Risks: Evidence from Remote Sensing Data

Corn is the most important grain crop in the U.S., and its production is dominated by cornsoybeans rotation system. While many previous studies document that rotation can bring about agronomic benefits, empirical evidence based on rigorous econometric analysis and large-scale data on the effects of crop rotation is still lacking. This study evaluates the impacts of “cornsoybeans” rotation system adoption on mean corn yields and yield risks in the U.S. Midwest. Using a unique recently developed field-level remote sensing-based data set, we adopt a twoway fixed effects framework and a series of robustness checks to achieve our study objectives. Our analysis suggests that rotation adoption has a statistically significant positive impact on mean corn yields. We also find that fields adopting rotation tend to have yields with statistically lower variance and kurtosis, as well as higher skewness. This suggests that rotation reduces corn yield risks. Moreover, regular rotation provides greater benefits for both yield and risk reduction than irregular rotation. Our findings indicate that crop rotation can bring about considerable economic benefits. We provide important empirical insights into producers’ risk management strategies.