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Application of Markowitz Portfolio Theory to Producing the World Major Field Crops

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  • Vasylieva, Natalia

Abstract

Development of growing cereals and oilseeds is a pressing issue for providing global food security and renewable energy. The study deals with applying methods of portfolio theory to mitigate natural and marketing uncertainties emerged from unstable yields and volatile prices for wheat, maize, barley, sunflower, soybeans, and rapeseed. The research outcome based on the utilization of Markowitz mean-variance indicators made possible to evaluate portfolio performances of the world top cereals and oilseeds producers. The study findings at a country level combined econometric forecasting of the crop revenues and modeling optimal portfolios of cereals and oilseeds subject to acceptable trade-offs between risks and expected revenues. The fulfilled calculations with Ukrainian focus clarified farmland allocations under cereal and oilseed crops to underpin biodiversity and keep firm positions in the world markets.

Suggested Citation

  • Vasylieva, Natalia, 2020. "Application of Markowitz Portfolio Theory to Producing the World Major Field Crops," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 10(3), December.
    • Handle: RePEc:ags:aolpei:309930
    DOI: 10.22004/ag.econ.309930
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    References listed on IDEAS

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    1. Rude, James & An, Henry, 2015. "Explaining grain and oilseed price volatility: The role of export restrictions," Food Policy, Elsevier, vol. 57(C), pages 83-92.
    2. Natalia Vasylieva, 2018. "Ukrainian Agricultural Contribution to the World Food Security: Economic Problems and Prospects," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 14(4), pages 215-224.
    3. Mekbib G. Haile & Matthias Kalkuhl & Joachim von Braun, 2016. "Worldwide Acreage and Yield Response to International Price Change and Volatility: A Dynamic Panel Data Analysis for Wheat, Rice, Corn, and Soybeans," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(1), pages 172-190.
    4. Bernhard Brümmer & Olaf Korn & Kristina Schlüßler & Tinoush Jamali Jaghdani, 2016. "Volatility in Oilseeds and Vegetable Oils Markets: Drivers and Spillovers," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(3), pages 685-705, September.
    5. Glen Mumey & Bob Burden & Ann Boyda, 1992. "Measurement of Farm Risk: Alberta Crop Production," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 40(1), pages 71-91, March.
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