Determinants of the Strength of Strategic Adjustments in Farm Capital Structure

Cesar Escalante () and Peter J. Barry

Journal of Agricultural and Applied Economics, 2003, vol. 35, issue 01, 12

Abstract: This study employs correlation relationships to measure the strength of trade-offs between business and financial risks as a representative of the strategic capital adjustment process. Under different business risk measures based on varying lengths of historical farm income data, results suggest that farmers tend to adopt a myopic perspective when contemplating risk-balancing plans. Cross-sectional regression results for two-time period models covering the decade of the 1980s and 1990s yielded important implications. The liquidity-constrained environment of the 1980s emphasizes the combination of risk-balancing plans, specialization, and market revenue-enhancing strategies. In the 1990s, risk balancing becomes compatible with risk-reducing crop diversification and insurance protection plans.

Date: 2003
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Journal Article: Determinants of the Strength of Strategic Adjustments in Farm Capital Structure (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:joaaec:37834

DOI: 10.22004/ag.econ.37834

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