Publication Type

Journal Article

Version

submittedVersion

Publication Date

5-2019

Abstract

This paper examines crop planning decision in sustainable agriculture---that is, how to allocate farmland among multiple crops in each growing season when the crops have rotation benefits across growing seasons. We consider a farmer who periodically allocates the farmland between two crops in the presence of revenue uncertainty where revenue is stochastically larger and farming cost is lower when a crop is grown on rotated farmland (where the other crop was grown in the previous season). We characterize the optimal dynamic farmland allocation policy and perform sensitivity analysis to investigate how revenue uncertainty of each crop affects the farmer's optimal allocation decision and profitability. Using a calibration based on a farmer growing corn and soybean in Iowa we show that growing only one crop over the entire planning horizon, as employed in industrial agriculture, leads to a considerable profit loss---that is, making crop planning based on principles of sustainable agriculture has substantial value. We propose a simple heuristic allocation policy which we characterize in closed form. Using our model calibration we show that (i) the proposed policy not only outperforms the commonly suggested heuristic policies in the literature, but also provides a near-optimal performance; (ii) compared to the optimal policy, the proposed policy has a higher allocation of crops to rotated farmland, and thus it is potentially more environmentally friendly.

Keywords

Farm Planning, Crop Rotation, Sustainability, Agriculture, Commodity, Uncertainty, Dynamic Programming, Corn, Soybean, Fallow

Discipline

Agribusiness | Operations and Supply Chain Management

Research Areas

Operations Management

Publication

Management Science

Volume

65

Issue

5

First Page

2060

Last Page

2076

ISSN

0025-1909

Identifier

10.1287/mnsc.2018.3044

Publisher

INFORMS (Institute for Operations Research and Management Sciences)

Embargo Period

6-1-2016

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1287/mnsc.2018.3044

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