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A Risk Analysis of Converting CRP Acres to a Wheat-Sorghum-Fallow Rotation

Author Info

Listed author(s):
  • Williams, Jeffery R.
  • Llewelyn, Richard V.
  • Pendell, Dustin L.
  • Schlegel, Alan J.
  • Troy, Dumler

Abstract

This study examines the economic potential of producing a wheat (Triticum aesitivum) and grain sorghum (Sorghum bicolor (L.) Moench) rotation with three different tillage strategies compared to the Conservation Reserve Program (CRP) in a semi-arid region. This research uses stochastic efficiency with respect to a function (SERF) to determine the preferred management strategies under various risk preferences and utility-weighted certainty equivalent risk premiums. Yields, input rates, and field operations from an experimental field in western Kansas are used to calculate net returns for each tillage strategy. Although current net returns to crop production using reduced tillage and no-tillage strategies are higher than CRP, risk analysis indicates CRP would be the preferred strategy for some risk-averse managers.

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File URL: http://purl.umn.edu/45985
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Paper provided by Southern Agricultural Economics Association in its series 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia with number 45985.

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Date of creation: 2009
Handle: RePEc:ags:saeana:45985
Contact details of provider: Web page: http://www.saea.org/

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Keywords: Conservation Reserve Program; conservation tillage; simulation; sorghum; wheat; risk; Agricultural and Food Policy; Crop Production/Industries; Farm Management; Land Economics/Use; Risk and Uncertainty;

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  1. Schumann, Keith D. & Richardson, James W. & Lien, Gudbrand D. & Hardaker, J. Brian, 2004. "Stochastic Efficiency Analysis Using Multiple Utility Functions," 2004 Annual meeting, August 1-4, Denver, CO 19957, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. Babcock, Bruce A. & Choi, E. Kwan & Feinerman, Eli, 1993. "Risk And Probability Premiums For Cara Utility Functions," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 18(01), July.
  3. Johnson, Phillip N. & Misra, Sukant K. & Ervin, R. Terry, 1997. "A Qualitative Choice Analysis of Factors Influencing Post-CRP Land Use Decisions," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 29(01), pages 163-173, July.
  4. J. Brian Hardaker & James W. Richardson & Gudbrand Lien & Keith D. Schumann, 2004. "Stochastic efficiency analysis with risk aversion bounds: a simplified approach," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(2), pages 253-270, 06.
  5. Richardson, James W. & Klose, Steven L. & Gray, Allan W., 2000. "An Applied Procedure For Estimating And Simulating Multivariate Empirical (Mve) Probability Distributions In Farm-Level Risk Assessment And Policy Analysis," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 32(02), August.
  6. Kalaitzandonakes, N.G. & Monson, M., 1994. "An Analysis of Potential Conservation Effort of CRP Participants in the State of Missouri: A Latent Variable Approach," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 26(01), pages 200-208, July.
  7. Kalaitzandonakes, Nicholas G. & Monson, Michael J., 1994. "An Analysis Of Potential Conservation Effort Of Crp Participants In The State Of Missouri: A Latent Variable Approach," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 26(01), July.
  8. Good, Darrel L. & Irwin, Scott H., 2008. "The New Era of Corn, Soybean, and Wheat Prices," Marketing and Outlook Briefs 183493, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
  9. repec:ags:joaaec:v:32:y:2000:i:2:p:299-315 is not listed on IDEAS
  10. Pendell, Dustin L. & Perry, William R. & Williams, Jeffery R. & Barnaby, Glenn Arthur, Jr. & Lubben, Bradley D., 2003. "Mathematical Formulas For Calculating Net Returns From Participation In Government Programs, Crp, And Crop Insurance Alternatives," Staff Papers 30711, Kansas State University, Department of Agricultural Economics.
  11. Johnson, Phillip N. & Misra, Sukant K. & Ervin, R. Terry, 1997. "A Qualitative Choice Analysis Of Factors Influencing Post-Crp Land Use Decisions," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 29(01), July.
  12. Dustin L. Pendell & Jeffery R. Williams & Scott B. Boyles & Charles W. Rice & Richard G. Nelson, 2007. "Soil Carbon Sequestration Strategies with Alternative Tillage and Nitrogen Sources under Risk," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 29(2), pages 247-268.
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Cited by:

  1. Feng Song & Jinhua Zhao & Scott M. Swinton, 2011. "Switching to Perennial Energy Crops Under Uncertainty and Costly Reversibility," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(3), pages 764-779.
  2. Galinato, Suzette P. & Young, Douglas L. & Frear, Craig S. & Yoder, Jonathan K., 2011. "Will Washington Provide Its Own Crop Feedstocks for Biofuels?," Western Economics Forum, Western Agricultural Economics Association, vol. 10(01).

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