An economic risk analysis of no-till management for the rice-soybean rotation system used in Arkansas

Arkansas is the top domestic rice producer, representing nearly half of total US rice production. Sediment is one of the major pollutants in rice-producing areas of Arkansas. In order to mitigate this problem, no-till management is often recommended. No-till is not well understood by farmers who believe that no-till is less profitable due to lower yields offsetting cost savings. This study evaluates the profitability and net return variability of no-till in the typical rice (Oryza sativa L.)-soybean (Glycine max L.) rotation used in Arkansas rice production. Crop yields, crop prices, and prices for key production inputs (fuel and fertilizer) are simulated for the rotation, and net return distributions for rice, soybean, and the two-year rotation are evaluated for no-till and conventional till using stochastic efficiency with respect to a function (SERF) analysis. The results indicate that both risk neutral and risk-averse rice producers would prefer no-till over conventional till management in the two-year rice-soybean rotation and that no-till soybeans contribute greatly to the overall profitability of the rotation.