Business Commons^™

Corn, Soybeans Or Fallow: Dynamic Farmland Allocation Under Uncertainty, Onur Boyabatli, Javad Nasiry, Yangfang (Helen) Zhou

Research Collection Lee Kong Chian School Of Business

This chapter develops a theoretical basis for understanding the trade-offs facing a farmer for allocating his farmland among several crops over multiple growing seasons. Specifically, we focus on the farmland allocation among two cash crops (corn and soybeans) and letting the farmland lay fallow to rejuvenate the soil and increase the revenue for the crop grown on this farmland in the subsequent seasons. In each growing period, the farmer chooses the allocation in the presence of revenue uncertainty for each cash crop, and crop rotation benefits across periods, where revenue is stochastically larger and farming cost is lower when a …