DIE GENERERING EN GEBRUIK VAN KUMULATIEWE WAARSKYNLIKHEIDSVERDELINGS VIR DIE EVALUERING VAN DIVERSIFIKASIE AS RISIKOBESTUURSWYSE IN DIE WINTERTONGEBIED

P. Breytenbach, J. A. Meiring and L. K. Oosthuizen

Agrekon, 1996, vol. 35, issue 4

Abstract: Cumulative probability distributions (CPDs) of a few financial criteria were generated with the aid of the FARMS model and used to evaluate diversification as a method of risk management by Winterton farmers. Given the management abilities of the farmer, the efficiency of risk management is influenced by the composition of fam,ing enterprises, the interaction between the enterprises and the debt-burden situation. The use of CPDs serves to portray the uncertainty and nature of the outcome as well as the financial implications of the inclusion of altemative enterprises clearly. Since the decision maker is familiar with the total width of outcome of the financial criteria, the probability of a specific required outcome level being realised can be detem,ined. ln addition the model can be used to evaluate cash and credit flow interactively in the decision-making process. With the assistence of the model and the use of the method of approach different management strategies can be evaluated at farming level.

Keywords: Agricultural and Food Policy; Research Methods/Statistical Methods; Risk and Uncertainty (search for similar items in EconPapers)
Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:ags:agreko:267977

DOI: 10.22004/ag.econ.267977

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