RISK MANAGEMENT STRATEGIES TO REDUCE NET INCOME VARIABILITY FOR FARMERS

Hamid Falatoonzadeh, J. Richard Conner and Rulon D. Pope

Southern Journal of Agricultural Economics, 1985, vol. 17, issue 01, 14

Abstract: The most useful and practical strategy available for reducing variability of net farm income is ascertained. Of the many risk management tools presently available, five of the most commonly used are simultaneously incorporated in an empirically tested model. Quadratic programming provides the basis for decision-making in risk management wherein expected utility is assumed to be a function of the mean and variance of net income. Results demonstrate that farmers can reduce production and price risks when a combination strategy including a diversified crop production plan and participation in the futures market and the Federal Crop Insurance Program (FCIP) is implemented.

Keywords: Risk; and; Uncertainty (search for similar items in EconPapers)
Date: 1985
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:sojoae:29374

DOI: 10.22004/ag.econ.29374

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