Economics of Diversified Cropping Systems in the Black and Dark Gray Soil Zones in the Canadian Prairie Region

• Author / Creator

  Liu, Chenxi

• There has been an ongoing trend of increasing Canadian canola production, coinciding with
  increased intensity of canola in rotations. This contrasts with extensive research that has found
  significant agronomic benefits from less canola-intensive and more diversified cropping systems.
  Current producer behavior in terms of increasing frequency of canola in rotations is attributable
  to the short-term profitability of canola relative to competing crops, although other factors such
  as participation in business risk management (BRM) programs may also be relevant.
  Understanding the role that these factors play in determining risk efficient crop rotations is of
  importance to industry as well as to policy makers.
  This study examines the economic trade-offs for alternative crop rotations, through an evaluation
  of net returns from crop production for representative Alberta and Saskatchewan cropping
  operations in the Black and Dark Gray soil zones. Production and market risk are incorporated
  through modeling of stochastic processes for crop yields and prices. Farm-level benefits and
  costs of rotations are estimated using Monte Carlo simulation and Net Present Value analysis
  methods. SERF analysis is used to identify risk efficient rotations for different levels of risk
  aversion. A common cropping rotation, consisting of spring wheat and canola was designed as
  the base rotation for all representative farms, and alternative cropping systems examined in the
  study were varied in length, specific crops included (i.e., barley, oats, field peas, flax) and degree
  of diversification/specialization.
  Results suggested all rotations for all three farms generated significantly positive expected
  wealth, while more specialized crop production were more economically viable due to the shortterm economic benefits associated with specialization. The annualized per acre risk premiums
  required by producers to adopt more diversified crop rotations were approximately $34, $2.30, and $11 in Camrose, Smoky River and Saskatchewan, respectively. Further, SERF results also
  suggested the advantages of specialized rotations are reinforced by participation in BRM
  programs, with corresponding increases in the risk premiums required to adopt more diversified
  rotations. This confirms the role of BRM programs in supporting adoption of more specialized
  crop rotations by crop producers in the study regions. While including yield effects of previous
  crops in the rotation did not have a significant impact on results for the risk efficiency analysis, it
  did highlight the relevance of this type of information on the economic performance of
  alternative rotations and the benefits (or lack thereof) of more diversified rotations. Lastly, the
  results from this study support the argument that information on negative productivity factors
  (e.g., disease event incidence and severity) are needed to provide producers with the knowledge
  required to make informed cropping management decisions.

• Subjects / Keywords

  • Economics
  • Cropping System
  • Prairie

• Graduation date

  Fall 2021

• Type of Item

  Thesis

• Degree

  Master of Science

• DOI

  https://doi.org/10.7939/r3-n56h-ey53

• License

  This thesis is made available by the University of Alberta Libraries with permission of the copyright owner solely for non-commercial purposes. This thesis, or any portion thereof, may not otherwise be copied or reproduced without the written consent of the copyright owner, except to the extent permitted by Canadian copyright law.