Effect of Income Risk on Optimal Cropping Pattern (Application of Data Envelopment Analysis Model)

Determination of the cropping pattern and optimal combination of crops by diversification of cultivation, as an approach to reduce income risk given the economic issues and resources. Income risk as combination of price and performance risks is one of the most important risks for farmers. In this study optimal cropping pattern of crops was determined to reduce income risk by applying risk and return measures in Gorgan County in 2018. For this purpose, the diversification-consistent DEA model based on directional-distance criterion was used. The results showed that 0.05 and 11 percent decreases, respectively, in the risk measures of the coefficient of variation and conditional value at risk. Also, a 24 percent increase of the expected profit measure in the optimal cropping pattern compared to the current pattern. Furthermore, the share of more profitable crops such as medium and long rice grain with high quality and rapeseed increased in the optimal cropping pattern and share of crops such as wheat and potatoes decreased. Due to the 60 percent share of medium and long rice grain with high quality in the optimal pattern, it is recommended to use tools such as income insurance and compensating for the development of rice cultivation in the region.