STRUCTURAL CHANGES UNDER CONDITIONS OF CHANGING RELATIVE PROFITABILITY OF ENTERPRISES

B. van der Westhuyzen and T. E. Kleynhans

Agrekon, 1987, vol. 26, issue 2

Abstract: The striving for higher profit in farming, or at least the maintaining of profit, sometimes requires drastic changes in the existing farming system. On exceeding the marginal values of a parameter, the relative profitability between enterprises changes in such a way that structural changes are necessary to comply with this effort. These structural changes result in a shift in emphasis in the importance of -enterprises in the farming composition. . When the marginal values of a parameter are therefore exceeded and these structural changes in the farming composition are not made, this leads to sub-optimum allocation of resources in farming. Such action runs counter to the aim for higher profit, or maintaining profit in the agricultural organisation. The farmer is required to be aware of the importance of the respective parameters for the relative profitability of enterprises and to react to medium to long-term price trends by making necessary adaptations in the farming system.

Keywords: Agricultural and Food Policy; Industrial Organization (search for similar items in EconPapers)
Date: 1987
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Persistent link: https://EconPapers.repec.org/RePEc:ags:agreko:267153

DOI: 10.22004/ag.econ.267153

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