ECONOMIC ANALYSIS APPROACHES TO POTATO-BASED INTEGRATED CROP SYSTEMS: ISSUES AND METHOD
In response to stagnating yields and mounting pest problems, Michigan potato growers are investigating ways to bring manure and cover crops back into potato production systems. The alternative systems bring benefits and costs for monetary net returns, the variability of net returns, and environmental impacts. This paper reviews the likely yield and biological system effects of alternative potato production systems that incorporate manure and cover crops. After briefly considering research designs for gathering experimental versus farm field data, it reviews four economic analysis methods for evaluating alternative systems. All methods are illustrated with examples. First, for evaluating comparative average profitability, it reviews a) enterprise budgets, b) partial budgets, and c) break-even analysis. Second, for integrating environmental impacts into profitability analysis by using monetary measures of environmental effects, it introduces "green" budgets. Third, for evaluating efficiency trade-offs between profitability and environmental impacts, it covers trade-off frontiers. Finally, for comparing the variability of returns across systems (including for risk-averse decision makers), it introduces analysis of variance and stochastic dominance. These methods provide a basic set of tools for the economic analysis of changes in potato-based crop systems that should be adequate for most static comparisons of annual crop management practices.
A STOCHASTIC DOMINANCE ANALYSIS OF ALTERNATIVE SUGAR BEET- AND NAVY BEAN- BASED CROP ROTATIONS IN MICHIGAN
Sugar beets (Beta vulgaris L.) and navy beans (Phaseoulus vulgaris L.) have been important target crops in the crop rotation systems of many Michigan growers, particularly in the Saginaw Valley and the Thumb region. The recent decline in sugar beet yields combined with the erratic navy bean yields have led to concern about the optimal crop rotation for the East Central region in Michigan. Risk is an important consideration in a farmer's choice of cropping systems. This study uses 20 years of experimental data from the Michigan State University Saginaw Valley Research Farm to determine the risk efficiency of alternative sugar beet- and navy bean- based crop rotations that included corn (Zea mays L.), oats (Avena sativa L.), and alfalfa (Medicago sativa L.) as rotational crops. The crop rotations differed in rotation length and crop sequence. Stochastic dominance analysis showed that the two-year rotation of sugar beets followed by navy beans was first-degree stochastic (FSD) and second-degree dominant (SSD) over 11 other crop rotation alternatives. Crop rotations that included sugar beets in two-year rotations and both sugar beets and navy beans in three-year rotations were the next stochastic dominant systems. Keywords: crop rotation, cropping system, risk, stochastic dominance analysis, first-degree stochastic dominance, second-degree stochastic dominance.
The Use of Qualitative Information in Macro-Economic Policy Analysis
The majority of macro-economic policy models takes for granted that conflicts among objectives can be assessed by means of a tradeoff analysis. Such tradeoffs imply that sacrifices and benefits of various impacts of decisions can be measured on a cardinal scale, so that a conventional macro-economic utility or welfare analysis can be applied.