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Managing Risk By Coordinating Investment, Marketing, And Production Strategies

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  • Johnson, Donald A.
  • Boehlje, Michael

Abstract

This study of the farm firm integrates long run investment and financial decisions, and short-run production and marketing decisions into a single decision framework that includes both time and risk. The results suggest that the use of various strategies for managing market risks allow the entrepreneur to accept mores risk in investing and producing; and that an integrated analysis of production, marketing and investment-financing alternatives is essential to make accurate recommendations about risk management strategies.

Suggested Citation

  • Johnson, Donald A. & Boehlje, Michael, 1983. "Managing Risk By Coordinating Investment, Marketing, And Production Strategies," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 8(2), pages 1-15, December.
    • Handle: RePEc:ags:wjagec:32087
    DOI: 10.22004/ag.econ.32087
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    References listed on IDEAS

    as
    1. Johnson, Donald Allan, 1979. "Investment, production, and marketing strategies for an Iowa farmer-cattle feeder in a risky environment," ISU General Staff Papers 197901010800008215, Iowa State University, Department of Economics.
    2. Peter J. Barry & David R. Willmann, 1976. "A Risk-Programming Analysis of Forward Contracting with Credit Constraints," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 58(1), pages 62-70.
    3. Reid, Donald W. & Musser, Wesley N. & Martin, Neil R., 1978. "Income Tax Aspects of Liquidation in Multiperiod Linear Growth Models," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 10(2), pages 29-34, December.
    4. Michael D. Boehlje & T. Kelley White, 1969. "A Production-Investment Decision Model of Farm Firm Growth," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 51(3), pages 546-563.
    5. R. R. Officer & A. N. Halter, 1968. "Utility Analysis in a Practical Setting," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 50(2), pages 257-277.
    6. James S. Plaxico & Darrel D. Kletke, 1979. "The Value of Unrealized Farm Land Capital Gains," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(2), pages 327-330.
    7. Anne E. Peck, 1975. "Hedging and Income Stability: Concepts, Implications, and an Example," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 57(3), pages 410-419.
    8. K. D. Cocks & H. O. Carter, 1968. "Micro Goal Functions and Economic Planning," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 50(2), pages 400-411.
    9. William Lin & G. W. Dean & C. V. Moore, 1974. "An Empirical Test of Utility vs. Profit Maximization in Agricultural Production," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 56(3), pages 497-508.
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    Cited by:

    1. Ziehm, William Walter, 1986. "An evaluation of alternative hedging strategies for Iowa cattle feeders: before, at, and after placement, 1974-1984," ISU General Staff Papers 1986010108000018118, Iowa State University, Department of Economics.
    2. Schnitkey, Gary D. & Taylor, C. Robert & Barry, Peter J., 1989. "Evaluating Farmland Investments Considering Dynamic Stochastic Returns And Farmland Prices," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 14(1), pages 1-14, July.
    3. Perry, Gregory M., 1986. "Managing Risk By Coordinating Investment, Marketing, And Production Strategies: Comment," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 11(2), pages 1-3, December.
    4. Johnson, Donald A. & Boehlje, Michael, 1986. "Managing Risk By Coordinating Investment, Marketing, And Production Strategies: Reply," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 11(2), pages 1-2, December.
    5. Schnitkey, Gary D. & Taylor, C. Robert, 1987. "Conventional Capital Budgeting Versus Stochastic Dynamic Analysis Of Optimal Farmland Purchase And Sell Decisions," Illinois Agricultural Economics Staff Paper 244662, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.

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    Keywords

    Farm Management; Risk and Uncertainty;

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