Machinery and Crop Selection with Weather Risk

Abstract

ABSTRACT THIS study illustrates a procedure to include weather risk in a profit maximizing crop/machinery selection model. An example was developed for the Texas Coastal Prairie. Results indicate that producers who became more weather risk adverse shifted from cotton to grain sorghum production and increased crop diversification to some extent. However, machinery investments per hectare increased as adversity to weather risk increased. Results indicate that weather risk is an important variable to include in a decision model and that crop strategies and machinery complement selection should be mutually determined in profit maximizing models.