Profits And Risk: Fitting An Old Framework To A New Agriculture
AbstractTextbooks in agricultural economics characterize resources used in production agriculture into four categories; land, labor, capital and management. Profit is presented as earned in the process of management. This traditional list of resources is respecified. Management becomes a specialized type of labor and two additional resources, information and the willingness and ability to bear risk, are added. It is argued that profits accrue not to management but to those willing and able to bear the risk inherent in production agriculture. The strategy of equity diversification is presented as a means for farmers to provide this resource and thus earn economic profits. Producer education and the repeal or amendment of legislation restricting the ability of farmers to diversify their equity investment are needed.
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Bibliographic InfoPaper provided by Western Agricultural Economics Association in its series 2001 Annual Meeting, July 8-11, 2001, Logan, Utah with number 36133.
Date of creation: 2001
Date of revision:
Risk and Uncertainty;
Other versions of this item:
- Wachenheim, Cheryl J. & Saxowsky, David M., 2002. "Profits And Risk: Fitting An Old Framework To A New Agriculture," Agribusiness & Applied Economics Report, North Dakota State University, Department of Agribusiness and Applied Economics 23532, North Dakota State University, Department of Agribusiness and Applied Economics.
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