Analysis Risk of rain variability in Rain Fed Wheat Production

Precipitation in rain fed wheat agriculture is of the main factors and is considered as the only source of water. Therefore precipitation variability can greatly affect production and may be regarded as one of the most important crop production risk .This paper focuses on analysis and investigating the rain risk .For this purpose, precipitation data and production yield of rain fed wheat of Mashhad, Bojnord and Birjand is used during years 1362 to 1383. First by using the Just and Pope stochastic production function; the economic effect of the rainfall on average and variance of production, has been studied. Then expected value of loss function as the proxy of risk has been estimated. The result showed that 1 percentage increase in cumulative rainfall may affect production variance more than production average. In addition, estimation results of expected loss value base on strike level of rainfall, is 36/3 mm in Mashhad, 20/4 mm in Bojnord and 53/9 mm in Birjand. In all of three cases cultivation rain fed wheat has high risk and rain risk in Birjand is the highest than the other cases of study. This important result is applicable to designing risk management tools especially insurance programs.