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The Impact of Price Stabilizing Policies on the Risk Efficient Crop/Fallow Decisions of Wheat Farmers in the Brown Soil Zone of Saskatchewan
Author(s) -
Schoney R. A.
Publication year - 1995
Publication title -
canadian journal of agricultural economics/revue canadienne d'agroeconomie
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 37
eISSN - 1744-7976
pISSN - 0008-3976
DOI - 10.1111/j.1744-7976.1995.tb00122.x
Subject(s) - subsidy , cropping , risk aversion (psychology) , crop , price risk , economics , agricultural economics , agricultural science , agriculture , business , agronomy , environmental science , expected utility hypothesis , biology , ecology , finance , financial economics , market economy , futures contract
The micro‐linkages between the crop/fallow decision and price‐induced risk are examined for wheat producers located on the brown soils of Saskatchewan. Three generic price stabilization policies are defined. Based on a bio‐economic simulation model, the risk‐efficient FLEXCROP decision rules are selected, and their corresponding cropping patterns are assessed for each generic price stabilization policy. Assuming no subsidy component within the mandatory price stabilization program: • risk lovers reduce cropped acreages by 0% to 4%, depending upon both the risk‐aversion level and the stabilizing program and • risk‐averse producers increase cropped acreage from 10% to 35% over no price stabilization.