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Stochastic Valuation of Hybrid Rice Technology in Arkansas

  • Lyman, Nathaniel
  • Nalley, Lawton Lanier
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    Despite the rapid producer adoption of hybrid rice (Oryza sativa L.) in recent years, the economic advantage of hybrid rice in the mid-Southern United States remains disputed. This study compares the economic risk and return of three popularly sown hybrid rice varieties: XL723, Clearfield® (CL) XL729, and CL XL745; and eight conventional rice varieties: Cheniere, CL 142-AR, CL 151, Francis, Roy J, Taggart, Templeton, and Wells; using University of Arkansas experimental test plot data from 2006 – 2010. Paddy and milling yield data on each variety are used to estimate a Just-Pope production function, allowing comparison of mean yields and mean yield variances across varieties. A Monte Carlo simulation is used to compare net returns and net return variance (risk) across hybrid and conventional varieties. Just-Pope estimation results indicate that hybrid varieties exhibit mean paddy yield premiums of 1.1 to 1.8 Mg ha-1 relative to the best performing conventional variety (Francis), furthermore the hybrid yield advantage is not associated with increased yield risk. Among hybrid-CL® and conventional-CL®, varieties, hybrid milling quality is not statistically different than conventional varieties. Among non-CL varieties, the hybrid XL723 exhibits a mean head rice yield (HRY) premium relative to conventional alternatives. Monte Carlo simulation results suggest that the net revenue advantage of hybrid-CL and conventional-CL® varieties makes them preferable to and non-CL conventional alternatives, respectively, across the entire range of producer risk preferences considered in this study.

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    Paper provided by Southern Agricultural Economics Association in its series 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida with number 142505.

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    Date of creation: 2013
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    Handle: RePEc:ags:saea13:142505
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