Profitability and risk analysis of alternative tillage systems in southern Ontario
The study determined the optimal tillage system by crop and soil type for a hypothetical risk neutral and risk-averse Ontario farmer growing corn, soybeans and wheat. The study used yield distribution data for 27 tillage-crop-soil texture combinations from field experiments adjusted for apparent discrepancies. Generally, medium-textured soils produce higher yields than alternative soil types with crop yields responding positively (negatively) to tillage intensity on heavy (light) textured soils. Rotational, minimum and no-till systems were the most profitable on heavy, medium and light-textured soils respectively. Crop yield of rotational (no-till) can decrease by 2 (5) percent on heavy (light) textured soils and still be competitive with conventional tillage. Using both expected utility and value-at-risk decision criteria, conservation tillage was risk-efficient particularly on medium and light-textured soils. The results suggest that static risk is not a reason for the perceived low adoption rate of conservation tillage and that the rates may be associated with the spatial heterogeneity in soil type.