Application of Markowitz Portfolio Theory to Producing the World Major Field Crops

Natalia Vasylieva

DOI 10.7160/aol.2020.120409
No 4/2020, December
pp. 123-131

Vasylieva, N. (2020) “Application of Markowitz Portfolio Theory to Producing the World Major Field Crops", AGRIS on-line Papers in Economics and Informatics, Vol. 12, No. 4, pp. 123-131. ISSN 1804-1930. DOI 10.7160/aol.2020.120409.

Abstract

Development of growing cereals and oilseeds is a pressing issue for providing global food security and renewable energy. The study deals with applying methods of portfolio theory to mitigate natural and marketing uncertainties emerged from unstable yields and volatile prices for wheat, maize, barley, sunflower, soybeans, and rapeseed. The research outcome based on the utilization of Markowitz mean-variance indicators made possible to evaluate portfolio performances of the world top cereals and oilseeds producers. The study findings at a country level combined econometric forecasting of the crop revenues and modeling optimal portfolios of cereals and oilseeds subject to acceptable trade-offs between risks and expected revenues. The fulfilled calculations with Ukrainian focus clarified farmland allocations under cereal and oilseed crops to underpin biodiversity and keep firm positions in the world markets.

Keywords

Cereals and oilseeds; risk; production portfolio; revenue forecast; Markowitz models.

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