I understand regression and inferential statistics.  I am not a statistical genius by any stretch, but I sure do like playing with statistics.  The two semesters I had of them in grad school just a few years ago were two of the hardest and most fun semesters of graduate school.  I really enjoyed the classes.  I enjoyed statistics. 

Enjoyed maybe too much. It ruined me on buying lottery tickets and raffle tickets at fundraisers.  Yea, I still buy a raffle ticket, but not a hand full, just one.  It also gets me in trouble at plot tours, field days and sales meetings with seed and chemical salesmen.  I question their sample size, plot design and resulting conclusions.  

I also question their yield vs. economic responses.  Farmers are hung up on yield.  Well that’s alright because everything we do is based on a yield.  You get paid on what you grow.  But you had better get paid more for that yield than what it cost you to grow it.  

And that is where I get in trouble.  Below are a couple of examples of selling yield or lack there of over the return in dollars to get that yield.  

Example 1 is a yield significant/economic non significant scenario that is pretty common in Ag right now.  The treatment to a growing crop results in a 5 bu/ac yield increase.  That yield increase is significant, as in the likely hood that the result is caused by the treatment is greater than random chance.  So by doing X you get a 5 bu yield increase.  Lest say that yield is corn:  Corn is $5 a bushel.  So you grossed a 5 bu increase at $5/bu for $25/ac.  But it cost you $26 to get the 5 bushel increase.  So I lost a dollar (-$1) in the end……….I lost money by increasing yield.  Then why do it?  

Example 2 is a yield non significant/economic significant scenario that is also pretty common today.  The treatment to a growing crop results in a 5 bu/ac yield increase.  That yield increase is NOT significant, as in the likely hood that the result is caused by the treatment is not greater than random chance.  So by doing X you get a 5 bu yield increase that could or could not be caused by the treatment.  But more often than not you get a 5 bu yield increase.  Lest say that yield is corn:  Corn is $5 a bushel.  So you grossed a 5 bu increase at $5/bu for $25/ac.  But it cost you $10 to get the 5 bushel increase.  So I gained or netted $15 in the end……….I gained money by increasing yield an insignificant amount.  Then why not do it?  

Both cases point to a flaw in our research models in Ag.  We assume that the underlying result of any practice we use has to be a significant yield increase.  Yes, I would hope anything I do results in a significant yield increase.  BUT ONLY IF IT MAKES ME MONEY.  I also would like to know if the economic return is significant (or at least greater than 50/50) for any treatment even when the yield may not be significant by a statistical model.  

In other words, farming is a business.  What is my return on investment for any practice despite the results of a significant yield response?  In the end it’s about net dollars earned, not winning the yield trophy. 

3 Responses to Significant Yield Results vs. Economically Significant Results

  • But will it repeat? It’s likely it won’t repeat? That’s what I read in “not greater than random chance” Price per bu is another untested variable?

  • Mike Kimmerly says:

    In your first example, a statistically significant yield increase where the cost outweighs the return is still an important piece of information that needs to be researched and measured, as either end of the cost/return formula may change and make this an everyday practice.

    In the second, since you don’t know if your main treatment or some other random factor was responsible for the yield increase (you might have an unidentified significant response to earthworm population :-) ) spending the $$ on that particular treatment is about the same as buying your handful of lottery tickets.

  • admin says:

    Mike and Garth

    Thanks for you input. I guess I should have been a little more clear, however you both are correct in your analysis and comments.

    The first example was a fungicide treatment. We were told at the meeting that it was a no brainer to spray corn because of the significant yield increase. However when you ran the economics, it was a different story to me.

    The second example was part of a data set in which a three years study was done showing the yield results to a seed treatment. The average results were a 0, 3 and 5 bu response and none of them were significant. However if you would have used the treatment you would have had an economic gain.

    I as a farmer would buy the lottery ticket on the seed treatment and not the fungicide. Maybe that is my weakness, I would buy that lottery ticket and not the Mega Millions!

    Thanks again and please continue to read and comment, it is much appreciated!

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