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A STRATEGIC AGRICULTURAL PRODUCTION MODEL WITH RISK AND RETURN CONSIDERATIONS

Rhonda L. Aull-Hyde and Solomon Tadesse

Agricultural and Resource Economics Review, 1994, vol. 23, issue 1, 10

Abstract: Decision support systems are generally geared to short-term tactical decision making. As an alternative, this paper develops a mathematical programming model to evaluate long-term strategic alternatives in the context of farm-level agricultural production where a broiler farm considers long-term implications of diversification into commercial aquaculture. The model considers a ten-year strategic planning horizon, incorporates financial risk and return considerations, and accommodates capacity variations. Results indicate that a diversification strategy significantly increases farm profitability over a strategic planning horizon while simultaneously maintaining financial risk below a predetermined tolerance level and return on investment above a predetermined level.

Keywords: Production; Economics (search for similar items in EconPapers)
Date: 1994
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Persistent link: https://EconPapers.repec.org/RePEc:ags:arerjl:31312

DOI: 10.22004/ag.econ.31312

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