Abstract
The agriculture investment decision affected by risk of capital and operation cost, yield and sale price of planted crops. This study examined risk of investment in green-house cucumber and tomato production and optimum mix of crop pattern at Al Batinah, Al Sharqiya Regions of Oman. The net present value with Monte Carlo simulation models are used to test risk efficiency and project viability. The result indicated that investment in two green-houses and growing one tomato crop and two cucumber crops (Tom1Cuc2) per year is more profitable and risk aversion. Stochastic Efficiency with Respect to a Function (SERF) performed and confirmed that (Tom1Cuc2) is the most risk efficient cropping system and got a positive NPV with 62% probability followed by growing tomato crop in two seasons with a positive NPV with probability of 58%. The study concluded tomato and cucumber producers are faced with different production and financial situations and their risk preferences play an important role in determining their production decisions. Risk premium analysis shows that greenhouse tomato growers need to be paid up to RO 2 847 to keep growing tomato instead of (Tom1Cuc2) cropping system. Greenhouse cucumber growers can sacrifices of RO 5 373 to justify not to switch from planting cucumber to grow (Tom1Cuc2) cropping system. Government subsidy should be given to farmers to construct new greenhouses to maximize their resource use efficiency, benefit from extended cropping season, protect their crops from adverse environmental conditions and increase food security.
Highlights
The vegetable crops cultivation area in Oman in 2017 recorded 52.9 thousand with a total vegetables production of 815 thousand tons
The Coefficient on of Variation of the probability distribution of net present values (NPV) was low for Model (1) and (3) and record 3.43% and 5.07% respectively and indicates that growing one tomato crop and two cucumber crops is most sustainable cropping systems with a risk efficient Net Present Value
The main task of this paper is to investigate green house cucumber and tomato cropping system sustainability and ranked them over the range of risk aversion levels
Summary
The vegetable crops cultivation area in Oman in 2017 recorded 52.9 thousand (acres) with a total vegetables production of 815 thousand tons. The vegetable cultivated area increased by 28% in 2017 compared to 2016 and total production is increased by 85% on the same period. The introduction of new technologies and green-houses will improve vegetable production growth and reduce import during summer season. Tomato is planted two to three times a year in green-houses and it benefits from a large harvesting period. Green-house cucumber is planted three to four times during the year and it takes short time for fruit maturity and harvesting. Green-house technology offer fresh cucumber and tomato off-season and contributes in food security, risk of yields and price variability and profit sustainability need to be tested and investigated
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