Analyzing the effects of risk and uncertainty on optimal tillage and nitrogen fertilizer intensity for field crops in Germany

This study provides a risk analysis of long-term field experiments in Germany (Bavaria) on various field crops (potato, wheat and corn), grown in rotation, under a variety of different tillage and nitrogen management systems. The field experiment provided yield and input data for the analysis, and was combined with market data relevant to the case-study region. The emphasis of the analysis is on the interaction between risk and tillage and nitrogen strategies. Over the whole rotation (corn–wheat–potato–wheat), conventional tillage combined with conventional nitrogen rates is optimal, both for risk-neutral and risk-averse farmers. Although less intensive management practices involve lower risk, the decrease in risk premium is not sufficient to alter the ranking of strategies, even for farmers with higher levels of risk aversion. Reducing nitrogen rates would be costly to farmers, especially under reduced or shallow tillage. Decoupled farm subsidies within the expected utility model show that even for a scenario with no subsidies our conclusions do not change.

► We model the effects of risk on optimal tillage and nitrogen fertilizer intensity. ► Risk aversion has no impact on the optimal tillage and nitrogen fertilizer strategies in this case study. ► The cost of using a risk-neutral model for nitrogen and tillage management are low. ► Production decoupled subsidies may influence production decisions of risk averters.