Economic Analysis of Roundup Ready Versus Conventional Cotton Varieties in the Southern High Plains of Texas

Phillip N. Johnson, Jason Blackshear

Abstract


The adoption of Roundup Ready cotton varieties has provided cotton producers alternative weed management options with the potential of lowering overall production costs and increasing lint yields.  The objective of this study was to evaluate the cost of production and profitability of Roundup Ready cotton compared to conventional cotton varieties in the Southern High Plains (SHP) of Texas from 1998 to 2000.  Individual enterprise and whole farm financial analyses were conducted on irrigated cotton operations and combined into a database to generate aggregate enterprise profitability and production cost data for Roundup Ready and conventional cotton varieties in the SHP.   Stochastic simulations were utilized to evaluate the profitability of Roundup Ready and conventional cotton varieties accounting for the variability of prices, yields, and production costs.  Stochastic dominance (STODOM) with respect to a function was used to rank the varieties accounting for the inherent stochasticity and different levels of producer risk aversion.  Weighted average results indicate that producers in the SHP received, on an aggregated basis, higher net incomes for Roundup Ready varieties compared to conventional varieties.   STODOM results were consistent with the “average” results and indicated Roundup Ready varieties dominated conventional cotton varieties when accounting for risk preferences and stochasticity of yields, prices, and production costs.

Keywords


Roundup Ready cotton; Stochastic Dominance; conventional cotton

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