Date of Graduation

12-2011

Document Type

Thesis

Degree Name

Master of Science in Agricultural Economics (MS)

Degree Level

Graduate

Department

Agricultural Economics and Agribusiness

Advisor

Lanier L. Nalley

Committee Member

Bruce L. Ahrendsen

Second Committee Member

Michael Popp

Keywords

Social sciences, Agricultural risk, Cultivar, Portfolio theory, Soybeans

Abstract

The purpose of this study was to estimate the effect of utilizing portfolio theory on producers' profitability in the production of soybeans in three test locations - Keiser, Marianna and Rohwer - in Arkansas. The study used empirical yield data, their variances and covariances over a nine year period (2002-2010) in selecting a portfolio of soybean varieties that maintains or increases yield while minimizing the yield risk. Furthermore, carbon emissions associated with soybean production was estimated by modeling the effect of a potential carbon tax as well as the potential benefit of carbon offset payments resulting from carbon sequestration. The results showed that there are significant advantages in planting a portfolio of soybean varieties that can enhance profits and decrease yield variability for soybean producers in Arkansas. In addition, by using variance and covariance across all soybean varieties in a given location, the risk minimizing combination of varieties could be obtained.

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