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Comparison of Long-Run Net Returns of Conventional and Organic Crop Rotations

Author

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  • Michael R. Langemeier

    (Department of Agricultural Economics, Purdue University, West Lafayette, IN 47907, USA)

  • Xiaoyi Fang

    (Department of Agricultural Economics, Purdue University, West Lafayette, IN 47907, USA)

  • Michael O’Donnell

    (Purdue Extension, Purdue University, West Lafayette, IN 47907, USA)

Abstract

This study compares the long-run net returns to land of conventional corn/soybean and corn/soybean/wheat crop rotations to that of an organic corn/soybean/wheat crop rotation. The net returns to land for the organic crop rotation were found to be approximately $68 and $74 per acre higher than those of the conventional corn/soybean and conventional corn/soybean/wheat crop rotations, respectively. Average net return estimates are sensitive to price, yield, and cost assumptions. Organic crop prices would have to drop more than 17.8 percent and organic crop yields would have to drop more than 16.8 percent before the conventional corn/soybean crop rotation was more profitable than the organic corn/soybean/wheat crop rotation. These percentage changes are relatively small compared to the historical relationships between organic and conventional crop prices and yields. A risk model was used to examine the trade-off between expected net returns and downside risk. Converting even a small proportion of acreage to an organic corn/soybean/wheat crop rotation improves net returns and reduces downside risk compared to only utilizing conventional crop rotations.

Suggested Citation

  • Michael R. Langemeier & Xiaoyi Fang & Michael O’Donnell, 2020. "Comparison of Long-Run Net Returns of Conventional and Organic Crop Rotations," Sustainability, MDPI, vol. 12(19), pages 1-7, September.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:19:p:7891-:d:418283
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    References listed on IDEAS

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    4. Greene, Catherine & Vilorio, Dennis, 2018. "Lower Conventional Corn Prices and Strong Demand for Organic Livestock Feed Spurred Increased U.S. Organic Corn Production in 2016," Amber Waves:The Economics of Food, Farming, Natural Resources, and Rural America, United States Department of Agriculture, Economic Research Service, vol. 0(05), June.
    5. Myles J. Watts & Larry J. Held & Glenn A. Helmers, 1984. "A Comparison of Target MOTAD to MOTAD," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 32(1), pages 175-186, March.
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    Cited by:

    1. Langemeier, Michael, . "Conventional and Organic Enterprise Net Returns," farmdoc daily, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics, vol. 11(140).
    2. Pérez-Mesa, Juan Carlos & Pérez-Mesa, Fº Javier & Tapia-León, Juan José & Valera-Martínez, Diego, 2022. "Scheduling vegetable sales to supermarkets in Europe: The tomato case," MPRA Paper 119883, University Library of Munich, Germany.
    3. Juan Carlos Pérez-Mesa & Francisco Javier Pérez-Mesa & Juan José Tapia-León & Diego Luis Valera, 2022. "Scheduling vegetable sales to supermarkets in Europe: The tomato case," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 68(11), pages 403-412.

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    Keywords

    organic crops; net returns; risk;
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