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Does crop diversity stabilize farmer's income? Time series analysis of agro-economic data from South Korea

WP 4-07

From 01/2011 to 12/2012

Principal Investigator: Christina Bogner, Thomas Koellner
Staff: Heera Lee

Abstract 2013: Temporal fluctuation of crop price and yield can have a strong influence on farmers’ income. Under uncertainty, farmers’ decisions on what to cultivate and when to harvest, is of crucial importance to secure their income as well as to provide related ecosystem services. Diversified farming (i.e. cultivating several crops) constitutes a portfolio of resources and has a potential to benefit not only farmers but also the environment. The quantification of fluctuations in agro-economical data is rarely pushed beyond simple statistical analysis. Thus, evaluating the effect of crop diversity on farmers’ income by methods of time series analysis is an alternative approach to understand the stability of farmers’ income conditions in South Korea. We applied Singular Spectrum Analysis (SSA) to quantify the fluctuation in crop prices and yields. Additionally, we compared three different portfolio scenarios (one crop, three crops and five crops). Our results showed, on the one hand, that a portfolio of stable and risky crops stabilised price and yield fluctuations. On the other hand, the direct influence of the increasing diversity in crop portfolios on farmer’s income has not been fully identified. One possible explanation is that when farmers cultivate only one crop, they planted rice which is the most stable crop in Korea due to governmental subsidies. However, these subsidies will be reduced gradually. Thus, the risk of fluctuating income for rice farmers will probably increase. Our results might have practical consequences for farmers’ decision making. Furthermore, we show that SSA can be applied to analyse crop diversity.

Key words: crop diversity, crop portfolio, time series analysis, Singular Spectrum Analysis (SSA), price fluctuation  


Poster January 2013

last modified 2013-03-07