Profitability and risk analysis of alternative tillage systems in southern Ontario

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Frimpong Manso, Patrick
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University of Guelph

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.

tillage system, crop, soil type, risk neutral, risk-averse, Ontario, farmer, corn, soybean, wheat, yield distribution