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Enhancing Farm Profitability through Portfolio Analysis: The Case of Spatial Rice Variety Selection

Published online by Cambridge University Press:  26 January 2015

Lawton Lanier Nalley ,
Andrew Barkley ,
Brad Watkins  and
Jeffery Hignight
Lawton Lanier Nalley
Affiliation:
Department of Agricultural Economics and Agribusiness, University of Arkansas, Fayetteville, AR
Andrew Barkley
Affiliation:
Department of Agricultural Economics, Kansas State University, Manhattan, KS
Brad Watkins
Affiliation:
University of Arkansas Rice Research and Extension Center, Stuttgart, AR
Jeffery Hignight
Affiliation:
University of Arkansas Rice Research and Extension Center, Stuttgart, AR
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Abstract

This study applies portfolio theory to rice varietal selection decisions to find profit maximizing and risk minimizing outcomes. Results based on data from six counties in the Arkansas Delta for the period 1999-2006 suggest that sowing a portfolio of rice varieties could have increased profits from 3 to 26% (depending on the location) for rice producers in the Arkansas Delta. The major implication of this research is that data and statistical tools are available for rice producers to improve the choice of rice varieties to plant each year in specific locations. Specifically, there are large potential gains from combining varieties that are characterized by inverse yield responses to growing conditions such as drought, pest infestation, or the presence of a specific disease.

Keywords

optimal variety selectionportfolio analysisriceG11Q15Q12
Type
Research Article
Information
Journal of Agricultural and Applied Economics , Volume 41 , Issue 3 , December 2009 , pp. 641 - 652
Copyright
Copyright © Southern Agricultural Economics Association 2009

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