Date of Award

Spring 2020

Document Type

Honors Thesis



First Advisor

Mike Allgrunn

Second Advisor

David Carr

Third Advisor

Mandie Weinandt


Agricultural Risk, Modern Portfolio Theory, Diversification

Subject Categories



This project applies Modern Portfolio Theory to South Dakota agriculture to determine whether farmers can both increase their return and decrease their risk through their choice of crop. An econometric model is used to predict state-wide crop revenue for different “portfolios” which each involve planting a different proportion of the eleven crops grown in the state. These predictions are then evaluated for their respective risk and return, measured by average revenue and standard deviation of revenue. Those portfolios which have a higher average revenue and a lower standard deviation of revenue than South Dakota experienced historically are then analyzed to determine their feasibility. Based on this analysis, it appears South Dakota could have reduced its agricultural risk and increased its return by either planting corn and wheat in the acres used to plant barley, or by planting corn and wheat in the acres used to plant sorghum.

Included in

Economics Commons



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