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Ranking Specialty Crop Profitability: Iterative Stochastic Dominance

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  • Parcell, Joe
  • Cain, Wayne

Abstract

This research used stochastic dominance with respect to a function to evaluate producer preference for cropping systems under uncertainty. Six alternative cropping systems were compared for seven different crops. Many times a producer is familiar a developing market opportunity for a specialty crop and the producer has to make a production decision based on yield uncertainty. This research analyzed by how much alternative crop and bio-energy crop yields would need to change to make a producer indifferent between the most preferred (dominant) cropping system and an alternative cropping system. For the current study, the stochastic dominance results indicate that the change in yield necessary is sufficiently large enough to keep producers from accepting the risk of engaging in alternative crop or bio-energy crop production. The paper concludes with study limitations, which the reader is encouraged to review.

Suggested Citation

  • Parcell, Joe & Cain, Wayne, 2014. "Ranking Specialty Crop Profitability: Iterative Stochastic Dominance," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170663, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea14:170663
    DOI: 10.22004/ag.econ.170663
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    References listed on IDEAS

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    1. Scott Johnson, C. & Foster, Kenneth A., 1994. "Risk Preferences and Contracting In the U.S. Hog Industry," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 26(2), pages 393-405, December.
    2. Raskin, Rob & Cochran, Mark J., 1986. "Interpretations And Transformations Of Scale For The Pratt-Arrow Absolute Risk Aversion Coefficient: Implications For Generalized Stochastic Dominance," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 11(2), pages 1-7, December.
    3. Wilson, Paul N. & Eidman, Vernon R., 1983. "An Empirical Test Of The Interval Approach For Estimating Risk Preferences," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 8(2), pages 1-13, December.
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    Keywords

    Crop Production/Industries; Risk and Uncertainty;

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