THE EFFECT OF INFLATION ON AGRICULTURAL PRODUCTION UNDER CONDITIONS OF RISK

J. van Zyl

Agrekon, 1986, vol. 25, issue 3

Abstract: From 1973 South Africa experienced double digit inflation with slower increases in agricultural producers' prices than for, inputs. This resulted in declining profitability and purchasing power parity of agricultural products, increasing debts and risk, and the weakening of agriculture's competitive position on international markets. Input price inflation creates cash flow problems for farmers and increases the necessity of a high level of operational management and conservative financial strategies. Individual farmers can possibly counteract the effect of input price inflation through increases in productivity and economizing on costs. Present competitive structures may however possibly result in accelerated input price inflation if increases in productivity and economizing on costs occur for agriculture in aggregate. Solutions will be dictated by general economic policy. More effective competition and the enlargement of effective demand through accelerated urbanization have, at least theoretically, potential possibilities.

Keywords: Agricultural and Food Policy; Financial Economics; Risk and Uncertainty (search for similar items in EconPapers)
Date: 1986
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:agreko:267132

DOI: 10.22004/ag.econ.267132

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