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We analyze the risks, returns and optimal adoption strategies for a representative Minnesota farm switching from conventional to organic cropping systems. The EPIC simulation model was calibrated based on the yields observed in a farming systems field study. A farm-level simulation model was constructed using the EPIC simulated crop yields and historical prices. Results were compared for an expected utility maximizing farm under a range of risk aversion levels, with and without management learning curves and biological transition effects. A dynamic programming model was then constructed to evaluate the joint effects of machinery replacement decisions, learning curves, and biological transition effects on optimal adoption strategies. Results show that producers will find it optimal to transition to organic systems as rapidly as possible, even with significant learning curves and machinery adjustment costs.

Subject(s): Risk and Uncertainty

Issue Date: 2006

Publication Type: Conference Paper/ Presentation

PURL Identifier:

Total Pages: 24

Series Statement: Selected Paper

Record appears in: American Agricultural Economics Association (AAEA) > 2006 Annual meeting, July 23-26, Long Beach, CA

Autor: Archer, David W. ; Kludze, Hillarius


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