Economic Evaluation and Risk Premium Estimation of Rainfed Soybean under Various Planting Practices in a Semi-Humid Drought-Prone Region of Northwest China

Abstract

Economic benefits and risk premiums significantly affect the production system decision making of farmers and government departments. This study evaluated the economic feasibility and estimated the risk premium of 12 rainfed soybean production systems with various planting densities, fertilization rates and planting patterns by considering the impact of soybean price fluctuation. There were two planting densities (D1: 160,000 plants ha−1 and D2: 320,000 plants ha−1), two fertilization rates (F1: 20 kg ha−1 N, 30 kg ha−1 P, 30 kg ha−1 K; F2: 40 kg ha−1 N, 60 kg ha−1 P, 60 kg ha−1 K) and three planting patterns (F+W0: flat cultivation with no irrigation; R+W0: plastic-mulched ridge-furrow cultivation (PMRF) with no irrigation; R+W1: PMRF with supplemental irrigation of 30 mm at the pod-filling stage). Based on the two-year (2019–2020) field data in a semi-humid drought-prone region of northwest China and soybean price fluctuation from January 2014 to June 2021, the net income (NI) was calculated by considering the impact of soybean price fluctuation and assuming constant soybean production costs. The net present value (NPV) method and the stochastic efficiency with respect to a function (SERF) method were used to evaluate the profitability of protective alternatives and the risk of these alternatives. The results showed that the 12 proposed soybean production systems were economically feasible. Reducing the fertilization rate reduced the input costs, but it did not necessarily result in a decrease in soybean yield and NI. The payback period of all production systems was within two years for farmers investing through loans. High-fertilizer and high-density production systems made personal investment obtain the highest economic benefit in this study, which was not the best investment strategy from the perspective of production-to-investment ratio and environmental protection departments. The preferences of farmers with various risk aversion and environmental protection departments in terms of risk premium were also proposed. The economic and risk assessment framework of this study can enhance the understanding of the adjustment of production systems from different perspectives, and provide strategies for promoting the protection of economic, environmental and socially sustainable agricultural systems.