Risk and returns of diversified cropping systems under nonnormal cross-, and autocorrelated commodity price structures

This study analyzes the risks of diversified tropical cropping systems that combine cocoa, plantain, and tree-crop components in different proportions versus traditional monocultures. A technique for modeling the expected val ues, variances, and covariances of correlated time-series variables that ar e autocorrelated and nonnormal (right or left skewed and kurtotic) is appli ed to simulate commodity prices. The importance of using simulated cumulati ve density functions (cdf's) which reflect the most important characteristi cs of the stochastic behavior of prices for analyzing risk and returns of d iversified agricultural systems is demonstrated. The analysis provides evid ence in favor of diversified cocoa-plantain-Cordia agroforestry system tech nologies versus the traditional monocultures.