ORGANIC ROW CROPS IN A DIVERSIFIED FARM PORTFOLIO

This paper estimates and compares the net returns of an organic row crop rotation to the returns of a conventional row crop rotation in the Midwest, and explores some of the sources of risk associated with organic row crop production. The study concludes modeling the optimal land use of a risk-averse producer assuming a producer is able to grow both organic and conventional row crops. The results indicate that the expected net returns of organic row crop production can be competitive with traditional corn and soybean production, however, the variation in returns can be nearly twice those of conventional production. The land use model indicates that organics is part of an optimal portfolio for producers with low levels of risk aversion. Land use changes to conventional corn and soybean production as risk aversion and farm size increase.