RISKS AND RETURNS IN THE TRANSITION FROM HIGH TO LOW CHEMICAL CROPPING SYSTEMS; Proceedings of the Fifth Joint Conference on Agriculture, Food, and the Environment, June 17-18, 1996, Padova, Italy

The objective of this paper is to improve our knowledge of how the traditional goals of income and risk reduction may affect farmers' choice of production methods especially those that are more environmentally sensitive. The distribution of net cash flows for alternative crop production methods or strategies were estimated. These distributions were compared to predict whether the traditional goals of income level and risk avoidance will be at odds with environmental goals or whether farmers can find production strategies that support both types of goals. Previous studies have used average yields and conditions to find that alternative tillage systems have lower costs that conventional systems (e.g., Smolik, Dobbs, and Rickerl; Weersink et al.) Salin, Dobbins, and Preckel estimated the distribution of net returns of different tillage systems but used only yield variation with no correlations. This paper extends their work by incorporating price variation and correlations between yields and prices. This study uses data from the initial years of a long-time, systems study in southwestern Minnesota. Even though the concept of sustainability in crop production involves a long-term, systems view of the use of natural resources, most studies have focused on single crop or single treatment effects. To address this lack of long-term, systems comparisons, two such studies were initiated near Lamberton in southwestern Minnesota in 1989: the Minnesota variable input crop management systems trials (VICMS I and II). Similar studies have begun in Wisconsin (Posner et al., 1995) and Italy (Giupponi, Olson, and Rosato, 1993). The emphasis of this paper is on whole systems analysis of the economic consequences of the transition to different production strategies.

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Working Paper WP96-04, Session III, Paper 3

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