Economically Feasible Crop Production Alternatives to Peanuts in Southwestern Oklahoma

Abstract

Changes in the U.S. peanut program, coupled with increased costs and complexities related to irrigation and production inputs, have resulted in drastically decreased planted acres and forced many peanut producers in the Southwest to consider alternatives crops. This study has attempted to examine the economic risk associated with producing peanuts and common alternatives for peanuts in Southwestern Oklahoma: irrigated and/or non-irrigated cotton and soybeans. Irrigated watermelons, seeded and seedless, were also considered as a high-valued horticultural crop alternative. Risk efficient crop production alternatives were identified using stochastic efficiency with respect to a function (SERF) criteria for a range of risk attitudes. Results indicate that seedless watermelon production is a highly probable alternative to irrigated peanuts if producers are willing to accept the risks associated with a perishable nature of the horticultural crops. The seedless watermelon production dropped rapidly in the rankings as the Absolute Risk Aversion Coefficient (ARAC) increased, suggesting that a rough knowledge of the risk attitude has significant importance in identifying preference ranking. Preference ranking indicate that irrigated peanuts production is a highly viable choice for risk averse farmers.