Abstract: The early 1970s marked the beginning of a new era in U.S. agriculture. The stagnant markets and persistent excess production of the previous two decades gave way to a more finely balanced supply and demand for agricultural commodities. Prices for most farm commodities increased nominally and became much more variable. During this same period several important changes occurred in agriculture's financial structure. Land values and rents were rapidly bid upward. Expansion in land, facilities, and equipment occurred at a rapid pace-the result in part of expectations of sustained income growth and a monetary policy that favored expansion. Changes in financial markets made the cost of the debt accompanying this expansion somewhat more sensitive to short-run changes in interest rates. Certain classes of farmers, particularly new entrants and those pursuing a rapid expansion strategy, became extremely vulnerable to changes in prices, costs, and production. Risk exposure increased and the economic resilience of many farm businesses declined as a result of this ten-year period. This rapid change generated concern on the parts of farmers, researchers, and the general public on the adequacy of farmers' managerial skills to cope with this uncertain environment. This concern was grounded in traditional concern for the welfare of farm families. However food security as well as the efficiency and structure of the agricultural sector were also considered to be at stake. This paper considers managerial response to risk from an operational perspective. I will describe briefly the farm management process and consider how the assessment and control of risk might be incorporated. My primary motive, however, is to use this framework as a means to identify economic research and extension problems that must be addressed if the managerial skills of agricultural decision makers are to be improved.
Publication Year: 1983
Publication Date: 1983-12-01
Language: en
Type: preprint
Access and Citation
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot