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Financial Risk Management Alternatives In A Whole-Farm Setting

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  • Pederson, Glenn D.
  • Bertelsen, Diane

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.

Suggested Citation

  • Pederson, Glenn D. & Bertelsen, Diane, 1986. "Financial Risk Management Alternatives In A Whole-Farm Setting," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 11(1), pages 1-9, July.
    • Handle: RePEc:ags:wjagec:32533
    DOI: 10.22004/ag.econ.32533
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    File URL: https://ageconsearch.umn.edu/record/32533/files/11010067.pdf
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    References listed on IDEAS

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    1. Eidman, Vernon R., 1985. "Planning an Integrated Approach to Farm Risk Management," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 3(1), pages 1-6, February.
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    Cited by:

    1. Lee, John G. & Lacewell, Ronald D., 1989. "Perversion of Risk Aversion: An Application to Farm Planning and Intertemporal Resource Allocation," WAEA/ WFEA Conference Archive (1929-1995) 244977, Western Agricultural Economics Association.

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      Keywords

      Agricultural Finance; Risk and Uncertainty;

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