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/Mentor

Nalley, Lawton L.

Committee Member

Ahrendsen, Bruce L.

Second Committee Member

Popp, Michael P.

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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