Comparison Of Risk In Organic, Integrated And Conventional Cropping Systems In Eastern Norway

Risk is important for farmers’ choice of cropping system. The aim of this study was to compare risk of organic, integrated and conventional cropping systems. Experimental cropping system data (1991-1999) from eastern Norway were combined with budgeted data. Empirical distributions of total farm income for different cropping systems were estimated with a simulation model that uses a statistical procedure to smooth the sparse experimental data. Stochastic efficiency with respect to a function was used to rank the cropping systems for farmers with various degrees of risk aversion. The results show that the organic system was riskiest, but the existing payment system and organic price premiums makes it the most economically viable alternative today.

Keywords: Risk analysis, crop farming, stochastic simulation, risk aversion, stochastic efficiency with respect to a function.

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Author(s): Eltun, R., Flaten, O., Korsaeth, A., Lien, G., Richardson J.W., Schuman, K.D.

Country: ,

Organizations(s): Dept. of Agricultural Economics, Texas A&M University, Norwegian Agricultural Economics Research Institute (NILF), Norwegian Crop Research Institute