A Return-Risk Analysis of Traditional Row Crop and Sod-Based Rotations in the Wiregrass Region of Alabama

Abstract

This study seeks to determine whether the sod-based rotation system provides farmers with a system that outperforms the traditional production system with respect to returns and risk. If the sod-based rotation system is not found to be a lower risk, higher return production system, then we want to determine which rotation is the optimal system to be adopted by farmers in the Wiregrass region. A Target MOTAD model was developed for this study to evaluate the return-risk relationships of seven enterprises for the Wiregrass Region of Alabama. The enterprises selected by the model were rain-fed traditional peanut-cotton rotation with government payments, irrigated land rented out, rain-fed land rented out, and the irrigated traditional peanut-cotton rotation. The sod-based rotation produces slightly more risk and less returns than the irrigated traditional peanut-cotton rotation for producers. The best use of land in the Wiregrass is the rain-fed traditional peanut-cotton rotation with government payments.