| Two efficient farms are constructed for the brown soils of Saskatchewan, Canada and for Mecklenburg, Germany based on producer panels. Both farms feature highly integrated cropping systems which take advantage of cropping synergies. However, farm risk is inherently different between the two because differences in 1) climate that gives rise to very different yield risk and cost structure, and 2) EU programs which offer fixed cash payments and stable sugar beet prices. As expected, risk is much higher for the Saskatchewan case farm - it has a chance of a negative cash flow of approximately one year in five. In sharp contrast, the Mecklenburg has very little chance of generating a negative cash flow. Hence, it is easy to understand why crop insurance and... |
