Risk Effects on Optimal Nitrogen Rates for Corn Rotations in Tennessee
2015
Boyer, Christopher N. | Roberts, Roland K. | Larson, James A. | McClure, M Angela | Tyler, Donald D.
The objectives of this study were to determine the effects of risk exposure on optimal N fertilizer rates for continuous corn (Zea mays L.), corn grown after cotton (Gossypium ssp.), and corn grown after soybean [Glycine max (L.) Merr.] and identify the optimal corn rotation for risk-averse corn producers. Data were collected from a 7-yr, corn-rotation, N-fertilizer experiment in Tennessee. Partial budgets were used to calculate net returns to N for corn grown after corn, corn grown after cotton, and corn grown after soybean. The flexible moment method was used for risk analysis, a unique application of this method that provides producers with information concerning traditional risk effects on decisions about crop rotations and N rates augmented by the effects of downside risk. Results from this study show rotating corn with cotton and soybean increased yields and net returns relative to continuous corn, but profit-maximizing N rates for corn were not greatly impacted by the crop planted in the previous year. Optimal N rates decreased for producers with more risk aversion, indicating that N fertilizer is a risk-increasing input. Downside risk was found for continuous corn and corn grown after soybean, increasing the risk premiums for these rotations above the risk premium for corn grown after cotton. Slightly to moderately risk-averse corn producers would prefer growing corn after soybean, but highly risk-averse producers would prefer rotating corn with cotton. Results provide corn producers with enhanced information about the effects of risk exposure on choices among corn rotations and N fertilizer rates.
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