|WATKINS, KENTON - University Of Arkansas|
|ANDERS, MERLE - University Of Arkansas|
|MANE, RANJITSINH - University Of Arkansas|
Submitted to: Journal of Agricultural and Applied Economics
Publication Type: Peer Reviewed Journal
Publication Acceptance Date: 3/29/2018
Publication Date: 6/4/2018
Citation: Watkins, K.B., Gealy, D.R., Anders, M.M., Mane, R. 2018. An Economic Risk Analysis of Weed Suppressive Rice Cultivars in Rice Production. Journal of Agricultural and Applied Economics. doi:10.1017/aae.2018.9.
Interpretive Summary: Weed management in rice is a constant challenge that is heightened with the increasing incidence of herbicide resistance among weed populations, increased input costs, and a diminishing availability of irrigation water. Weed-suppressive rice varieties have produced acceptable grain yields while reducing the impacts from weeds, thus potentially allowing farmers to reduce herbicide use in some rice production systems. However, detailed economic considerations of attempting to use such varieties are not well understood. In this study, grain yields and herbicide application data from a previously published three-year agronomic study were used to evaluate the potential profitability of growing weed-suppressive rice varieties over a range of risk-aversion preferences by farmers. The three-year study evaluated both rice yield and weed control for seven varieties under three weed management levels (low, medium, and high herbicide inputs), and two irrigation systems (conventionally-flooded and furrow-irrigated). Using data such as herbicide and seed costs, other production costs, and rice yields, prices, and milling efficiencies, our study applied mathematical approaches including simulation and “Stochastic Efficiency with Respect to a Function” (“SERF”) to rank rice varieties under a range of levels of herbicide input and farmers’ various aversions to risk. Rice yields under the furrow irrigation treatment were so low and variable across rice varieties, weed management treatments, and years (e.g. complete crop failure in 2010), that meaningful economic comparisons could not be generated, and thus were excluded from the economic analysis in this paper. Conventional flood-irrigation results provide strong evidence that weed-suppressive Indica varieties such as PI 312777 and Rondo can achieve greater profitability by using reduced herbicide inputs (“medium” rather than “high”) compared with the five commercial varieties included in this test. Our analyses indicate that “risk neutral” farmers growing such weed-suppressive varieties might logically prefer using medium weed management (reduced herbicide input) rather than high weed management (more herbicide input). Risk premiums for using medium over high weed management were also preferred across all levels of risk aversion for these two varieties (in other words, it was less risky to choose the reduced herbicide level). The results also indicate that these two varieties have more potential for greater profitability and preferred selection among risk averse farmers when compared with the other varieties tested. The overall results suggest that the best variety-management combination was PI 312777 under medium weed management followed by Rondo under medium weed management. Wells, a long-grain inbred, was the strongest performing commercial variety, doing best under high weed management at most levels of risk aversion. Contrasting results were generally found for four other commercial varieties evaluated in the analysis (two long-grain inbreds, a medium-grain inbred, and a hybrid: Lemont, CL171AR, Bengal, and CLXL729, respectively), with Lemont being by far the most risky choice of all. These results suggest the potential to reduce dependence on herbicide inputs in flood-irrigated rice exists when using weed suppressive varieties. However, because these weed-suppressive varieties have milling quality that is lower than that of the other commercial varieties tested, and is sub-standard for the U.S. rice industry, the milling quality of weed-suppressive varieties still needs to be improved if they are to become broadly commercially acceptable within the rice industry. The high variability and low productivity under furrow irrigation (“stressed” environment) suggests that these systems are likely to be highly risky when reducing herbicide inputs, regardless of the variety used.
Technical Abstract: Weeds are a major constraint to rice production. In the United States, most rice cultivars are not inherently weed-suppressive and require substantial herbicide inputs to achieve agronomic and economic viability. Intensive herbicide application in rice also has many potential drawbacks, resulting in environmental pollution, human health concerns, and development of weed resistance. Because of these shortcomings, many have proposed the use of weed suppressive or allelopathic rice cultivars to reduce heavy dependence on synthetic herbicides. Weed-suppressive rice cultivars have been shown to produce commercially acceptable yields and reduce weed impacts. However, the economics of using weed-suppressive rice cultivars has not been fully evaluated. This study evaluated the stochastic profitability of weed suppressive and weed non-suppressive rice cultivars under alternative herbicide intensity levels and ranked these risk outcomes for decision makers who are risk averse. The economic analysis was based on data obtained from a published three-year agronomic study conducted in Stuttgart, Arkansas for the years 2009, 2010, and 2011. The cultivars evaluated were two weed suppressive Indica cultivars (Rondo and the allelopathic cultivar PI 312777), a high-yielding commercial hybrid (CLXL729), and four weed non-suppressive cultivars (Bengal, Wells, Lemont, and CL171AR). Weed management was classified as “low”, “medium”, and “high” based on varying levels of herbicide intensity. Rice grain yields and rice prices adjusted for milling quality were simulated by cultivar – weed management combination and then used to construct stochastic returns above production costs for each combination. Stochastic Efficiency with Respect to a Function (SERF) was used to rank rice cultivar – weed management combinations based the certainty equivalents (CEs) of each risky option mapped across increasing levels of risk aversion. The results provide evidence that weed-suppressive cultivars can achieve greater profitability by using less herbicide inputs relative to weed non-suppressive rice cultivars. The weed suppressive rice cultivars PI 312777 and Rondo both had larger mean net returns under medium weed management when compared with high weed management. The SERF analysis indicated that risk averse decision makers growing either of these two weed-suppressive cultivars would prefer using medium over high weed management, as the mappings of monetary certainty equivalents (CEs) across increasing levels of risk aversion were higher for both PI 312777 and Rondo under medium weed management relative to high weed management. Risk premiums for using medium weed management over high weed management were also positive for PI 312777 and Rondo across all levels of risk aversion. Opposite results generally were found for the remaining five cultivars evaluated. The SERF results indicate the best cultivar – weed management combination overall was PI 312777 using medium weed management. Similarly, Rondo under medium weed management dominated all other cultivar – weed management combinations except Wells – high weed management under most levels of increasing risk aversion.