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Benefits of diversified horticultural systems: assessment with the modern portfolio theory

Abstract : In a context of a redefinition of farming system, innovative cropping systems have arose in the recent decades. Among them, diversified horticultural systems show a growing interest in Europe, especially among new entrants into farming. One of the main motivations for farmers to grow simultaneously a variety of vegetables and fruits is to reduce the overall risk on production through a diversification effect. On the theoretical point of view, risk reduction based on diversification of assets is a well-studied mechanism in economics that has been formalized in the Modern Portfolio Theory (MPT). In practice, farmers tend to build crop portfolios that generate the highest yield while minimizing the risk on the overall crop production. The objective of this study was to understand how different fruit-vegetable combinations shape the relationship between production and risk in a diversified farming system. Based on the MPT framework, we explored all possible crop portfolios composed of 1 to 5 crops chosen in a list of 22 commonly grown fruits and vegetables. Results showed that (i) increasing portfolio compositions from 1 to 5 crops progressively improves the production-risk trade-off that farmers have to face; (ii) fruit and vegetables classification does not show clear trends to conclude on the interest of diversification based on botanical aspects. These results led us to identify suitable diversification strategies for fruits and vegetables production that make it possible to reduce the overall risk on crop production while maintaining the same level of production.
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  • HAL Id : hal-02737684, version 1
  • PRODINRA : 435220

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Raphaël Paut, Rodolphe Sabatier, Marc Tchamitchian. Benefits of diversified horticultural systems: assessment with the modern portfolio theory. 13. European IFSA Symposium, International Farming Systems Association (IFSA). AUT., Jul 2018, Chania, Greece. ⟨hal-02737684⟩

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