Probability Distributions of Crop Prices, Yields, and Gross Revenue

Abstract

This study shows that the price-yield correlation is a major influence in determining the skewness of revenue. Therefore, normality for revenue may not be rejected even if the price and/or yield distributions are significantly skewed. Analysis of cotton revenue for Mississippi shows that this can be the case empirically when the correlation between price and yield is moderately negative and the relative variability of yield and price is not too high. Hence, for crops produced in their major production regions where negative correlations between prices and yields are the greatest, revenue distributions may have a greater tendency toward normal.