Revenue and Risk Analysis of Soybean Pest Management Options in Virginia

Abstract

Net revenues associated with alternative pest management strategies for representative Virginia soybean producers were estimated and compared. The attractiveness of different pest management options was compared by considering net revenue risk in conjunction with the corresponding level of expected net revenue. Extension Service soybean budgets were modified to correspond to alternative pest management strategies and then used to compare the average net revenue of the alternatives. A simulation model of net revenue was constructed for a representative Virginia soybean farm using alternative pest management strategies. Probability distributions of net revenue were generated and then compared using stochastic dominance analysis. Results from the net revenue comparisons of both expected net revenue and net revenue risk suggested that, for given cropping systems, producers would prefer strategies that incorporate an integrated pest management (IPM) approach to pest control rather than a pest control approach that relies completely on pesticides. Since pesticide use is associated with negative environmental effects, the IPM alternatives, which in general decrease pesticide use, would be preferable from a social as well as a private or producer viewpoint.