Using Input Costs and Anticipated Commodity Prices to Determine Whether to Plant Corn.

Farmers who manage sandy-loam soils in the coastal plain region of the southeastern US have a difficult time determining if they should plant corn and how many acres they should plant in a given growing season.  Although the climate and soils of the region have the potential for corn yield above 12.5 t ha^-1 there is a substantial risk of dry weather adversely impacting yield and profit.  Ultimately, the decision about how many acres a corn grower should plant is dictated by two factors:  the potential for adequate rainfall and commodity markets that provide enough incentive to overcome the risks associated with growing corn.  While weather predictions are not accurate enough to assist growers at this time, there are methods available to assess the economic risks associated with growing corn in the coastal plain and determining if commodity prices provide enough incentive to overcome the grower’s aversion to risk.  Using either average county corn yield or the grower’s yield over the past 10 years and regional input costs crop budgets for different management strategies were developed to examine potential net returns for the coming growing season.  Using a stochastic dominance analysis different planting strategies are examined based on the growers aversion to risk.  From this growers can identify commodity price levels that provide enough incentive for them to grow corn and help them decide how many acres of corn should be planted.