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Diversification As A Risk Strategy In Times Of Change: A Study In The Eastern Orange Free State

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  • Binding, H. R.
  • van Schalkwyk, H. D.
  • van Zyl, J.
  • Sartorius von Bach, H. J.

Abstract

Data from 100 commercial farmers in the Aberfeldy pedosystem (situated in the North-eastern Orange Free Sate) were used to analyse diversification as a risk alleviating strategy. In theory, diversification reduces risk, but when the ability with respect to management or entrepreneurship is ignored, diversification may increase risk. Results show that any excessive attitude towards risk is undesirable. Both risk averters and risk seekers showed a greater probability of finacial deterioration or failure. Risk neutrality seems to be the optimal strategy.

Suggested Citation

  • Binding, H. R. & van Schalkwyk, H. D. & van Zyl, J. & Sartorius von Bach, H. J., 1993. "Diversification As A Risk Strategy In Times Of Change: A Study In The Eastern Orange Free State," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 32(4), December.
    • Handle: RePEc:ags:agreko:267597
    DOI: 10.22004/ag.econ.267597
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    References listed on IDEAS

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    1. Van Zyl, J., 1989. "Die aard en omvang van risiko's in die RSA landbou," 1989 Annual Conference, September 25-27, Bloemfontein, South Africa 314725, Agricultural Economics Association of South Africa (AEASA).
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    Cited by:

    1. Nel, A.A. & Loubser, H.L., 2004. "The impact of crop rotation on profitability and production risk in the Eastern and North Western Free State," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 43(1), pages 1-11, March.
    2. Botha, P.W. & Meiring, J.A. & Schalkwyk, H.D., 1999. "Quantifying The Risk Associated With Crop Rotation Systems Of An Eastern Free State Trial," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 38(2).

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    Keywords

    Agricultural Finance; Risk and Uncertainty;

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