Precipitation causes quality losses of large economic relevance in wheat production

Abstract

Adverse weather conditions can affect both crop yield quantity and yield quality. In wheat production, especially the risk of a downgrading due to low baking quality, as indicated by the Hagberg Falling Number, can cause large economic losses after precipitation events. We here estimate precipitation effects on the risk of such a downgrading and quantify the resulting economic losses. To this end, we leverage a panel dataset from the Swiss wheat varieties trial network (N=1’859) and high-quality weather data. We use a fixed effects estimation framework to estimate precipitation effects and simulate economic losses. We find that precipitation close to harvest significantly increases the risk of a downgrading due to low baking quality. Moreover, downgrading events cause large revenue reductions of up to 1’445 Swiss francs per hectare. This adds new economic insights, highlights the role of weather-dependent crop quality, and provides a basis to improve risk management.