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Influence of Market Diversification on Farm Income Variability of Soybean Producers

  • B. R. Eddleman (a1) and J. E. Moya-Rodriguez (a1)

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Many decisions made by farm producers are based on expectations. The process of formulating and incorporating these expectations into decision making is difficult when high variability occurs in product prices, crop yields, production costs, or other factors affecting net income. Farm producers may be influenced by a number of goals in selecting combinations of crops to produce and marketing outlets for the crops. Two goals generally held to be important to farm decision makers are maximization of net income and net income stability. Given the price, yield, and cost of production variability characteristics of a farm enterprise and these two goals of farm decision makers, a fundamental problem is to determine what combination of alternative marketing actions can best satisfy the two objectives. A systematic examination of the relationship between the level of net income and net income variability for combinations of marketing alternatives would aid farmers in deciding on marketing actions to attain these goals.

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[1] Adeyemo, Remi, et al.On Farm Soybean Storage: Cost and Potential Returns”, Mississippi Agricultural and Forestry Experiment Station Bulletin 863, December 1977.
[2] Barry, Peter J. and Willmann, David R., “A Risk-Programming Analysis of Forward Contracting with Credit Constraints”, American Journal of Agricultural Economics, Volume 58, 1976, pp. 6270.
[3] Cooke, Fred T. Jr., et al. Crop Budgets and Planning Data for Major Farm Enterprises in the Mississippi and Louisiana Delta, 1975, Mississippi Agricultural and Forestry Experiment Station DAE Report No. 484, June 1975.
[4] Eddleman, B. R. and Parvin, D. W. Jr.Crop Budgets, Cost of Production, Investment, Yield and Price Variability for Soybeans,” AEC Staff Paper No. 25, Department of Agricultural Economics, Mississippi State University, May 1977.
[5] Kuester, J. L. and Mize, J. H.. Optimization Techniques With Fortran. New York: McGraw-Hill Book Company, 1973.
[6] Mississippi Crop and Livestock Reporting Service. Mississippi Agricultural Statistics, 1973-76, Supplement No. 11, USDA Statistical Reporting Service, November 1977.
[7] Parvin, David W. Jr. et al. Cost of Production Estimates for Major Crops, Mississippi Delta, 1976, Mississippi Agricultural and Forestry Experiment Station Bulletin 843, February 1976.
[8] Simmons, Donald M. Nonlinear Programming for Operations Research. Englewood Cliffs, New Jersey: Prentice-Hall, Inc., 1975.

Influence of Market Diversification on Farm Income Variability of Soybean Producers

  • B. R. Eddleman (a1) and J. E. Moya-Rodriguez (a1)

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