Risk Analysis and Sustainability of Alternative Cotton Production Systems in Mississippi

Abstract

ABSTRACT In the Brown Loam Area of Mississippi, cotton producers use both conventional tillage (CT) and no-tillage (NT) systems. The NT system helps conserve the soil while CT is more erosive. The results of this study evidenced that NT cotton generated both a higher yield and net profit than CT. To estimate the costs and returns of cotton production, budgets were generated for both systems. Yields and income were higher for the NT than the CT system. This study also estimated and compared the risk involved in both CT and NT systems for cotton production in the Brown Loam Area of Mississippi. The mean net present values (NPVs) were calculated to compare the profitability of a CT with a NT system for different soil depths, discount rates, and planning horizons. The mean or average measures of NPVs were estimated as a computation of central tendency and standard deviations as their dispersions from the mean values. Risk was measured as a standard deviation from the mean NPV. The simulated mean NPVs from NT were higher compared with CT. The standard deviation from CT was much larger than in the NT system. The higher level of variation in NPV for the CT system indicates that this system is more risky than NT.