FINANCIAL RISK MANAGEMENT ALTERNATIVES IN A WHOLE-FARM SETTING

Glenn D. Pederson and Diane Bertelsen

Western Journal of Agricultural Economics, 1986, vol. 11, issue 01, 9

Abstract: Risk programming and simulation methods are used to analyze the opportunity to reduce whole-farm risk in a diversified cash crop farm through reduced leverage and/or adjustments in rental arrangements. These two financial strategies are shown to extend the ability of the farm operator to manage downside risk beyond the singular effects of a diversified farm plan. The analysis indicates that a trade-off occurs between these strategies, but that the reduction of debt has a greater impact on the distributions of net cash flow (before taxes) and outstanding term debt.

Keywords: Agricultural Finance; Risk and Uncertainty (search for similar items in EconPapers)
Date: 1986
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Persistent link: https://EconPapers.repec.org/RePEc:ags:wjagec:32533

DOI: 10.22004/ag.econ.32533

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