The resilience of farmers and farm families are often threatened by the risk associated with farm income. One of the sources of farm income risk is the volatility or variability in crop yields. Climate change or crisis could amplify this risk thereby making farmers, their families and communities less resilient. One of the ways that farmers could manage farm income risk is to diversify their operations by adding crop enterprises. Enterprise diversification works best as an income risk management strategy if the returns from the crop that is being added is negatively correlated with the returns from the other crops. Understanding how the income from some crops or enterprises correlate with those other crops is a vital tool in using diversification as a risk management tool. We assess the suitability of producing sweet potatoes as a way to manage farm income risk through enterprise diversification. We identify major crops that are produced in North Carolina to include cotton, hay, peanuts, soybeans, flue cured tobacco, wheat, squash, strawberries, tomatoes and sweet potatoes. We then derive the annual revenues per acre for each crop as the product of the per acre yield and price per unit for each of the last 15 years. The correlation coefficients between the revenues per acre between sweet potatoes and each of the other crops are estimated. The correlation coefficients between sweet potatoes and the other crops range from -0.002 for squash, and 0.79 for hay. After squash, the next lowest correlation coefficient is between sweet potatoes and snap beans at 0.29 while that with peanuts is 0.47. These results indicate that farm operations in North Carolina that include sweet potatoes and squash could reduce farm revenue risk without substantially reducing the level of revenue.
