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Will summer fallow re-emerge in the dark brown soil zone of the Canadian prairie as a response to net return risk?

Le Roy, D.G., Smith, E.G., MacCallum, P.J., Janzen, H.H. (2017). Will summer fallow re-emerge in the dark brown soil zone of the Canadian prairie as a response to net return risk?, 97(2), 214-249. http://dx.doi.org/10.1139/cjps-2016-0053

Abstract

© Her Majesty the Queen in right of Canada 2017. We assessed the extent to which summer fallow in the Dark Brown soil zone is likely to return as a response to net return (NR) risk. An economic model was used to identify, delineate, and quantify the effects of changes in product prices and input costs on the long-term economic performance of cereal, legume forage, and legume green manure rotations, based on a long-term study at the Agriculture and Agri-Food Canada, Lethbridge Research and Development Centre in Lethbridge, Alberta. The analysis determined NR from the rotations and simulated NR in a stochastic risk model. Each rotation had a different yield distribution and cost profile. The NR risk for the rotations was evaluated using stochastic efficiency with respect to a function. A risk-free return was computed to rank the rotations. Continuous fertilized wheat was the most profitable crop rotation, followed by three-year rotations with fallow and either nitrogen fertilized wheat or livestock manure applied after fallow. Rotations with higher NR used less fallow but had higher risk. Summer fallow is unlikely to re-emerge as only rather risk averse and very risk averse growers would use summer fallow as a means of reducing NR risk.

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