Empirical Evaluation of the Risk and Cost Effects of Geographic Diversification in Central Illinois Grain Farms

The risk and cost effects of geographic diversification in central Illinois were deterministically simulated in representative grain farms, using tract-level yield data to estimate the relationship between correlation of yield and distance between tracts. The results indicate that the costs involved in transporting machines and equipment from tract to tract, far outweigh the derived risk (variance) reduction benefits. Survey results also showed that farmers appear to be aware of this unfavorable tradeoff. The results of the simulation also indicate that while geographic diversification may not be an attractive risk management strategy for the individual farmer, it holds promise for large institutional investors who do not have to deal with transporting machines and equipment between tracts.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Agricultural Economics

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2014

Author dc:creator

• Nartea, Gilbert Valenton

Contributors dc:contributor

• Barry, Peter J.

• Agriculture, General
• Economics, Agricultural
• Economics, Commerce-Business

Identifier

(UMI)AAI9503283

OAI identifier oai:identifier

oai:www.ideals.illinois.edu:2142/72181