This study is directed toward an investigation of the longer term aggregate consequences that arise from producer behavior in a production environment characterized by risk and uncertainty. In particular, the papers included herein examine circumstances under which individual actions may result in adverse long term consequences in the aggregate market, even though they are based on rational decision-making from the producer's point of view. The research is conducted in two distinct components, resulting in the presentation of two separate manuscripts. In the first paper a single product market model is developed with producer actions characterized by risk averse behavior. Individuals are assumed to maximize the expected utility of profits according to a mean-variance specification. Using an analytical framework, it is determined that risk averse actions can increase aggregate risk levels once market adjustment is completed. Aggregate market risk is measured by the change in the expected value and variance of consumers' and producers' surplus. Market effects are found to depend on the relative elasticity of demand and the price expectation formulated by the producer. The second paper explores the issue of declining soil productivity from a social perspective. Using a simulation model developed for a generalized agricultural market, the potential long term impacts of erosion on crop prices and on resulting measures of social welfare are examined. It is found that in the aggregate producers with erosive land are generally better of without erosion control than with erosion control, at least for the first few generations. In the long run however, these producers are significantly worse off as the effects of erosion outweigh any technology improvements. / Graduation date: 1987

The Federal Crop Insurance program is a management tool which is available to U.S. farmers and which is designed to protect them against low yields arising from natural disasters. Since the program is optional in nature, its provisions cannot be detrimental to a rationally behaving farmer. This work analyzes but goes beyond the private benefits of the Federal Crop Insurance program to farmers and represents a qualitative and quantitative attempt at investigating the implications of the availability of the program on risk-taking behavior and social welfare. Analytically, a simple model of the allocation of land among two crops (one safe and the other risky in the yield) is used along with the behavioral hypothesis of expected utility maximization. It is indicated that a subsidized program will, in general, induce greater risk-taking behavior. The impact of the program on crop-mix is, however, ambiguous when the expected insurance indemnities fall short of the premium paid. Given insurance availability, however, it is demonstrated that, under some reasonable assumptions about farmers' risk preferences, a premium subsidy will tend to induce greater risk taking. A major portion of the empirical work, which is undertaken within an expected value of income-variance of income framework, relates to the estimation of farmers' risk preferences on the basis of actual crop-mix data for individual farms in Arizona and estimated subjective distributions about prices, yields and costs of production. The estimation of the subjective distribution of prices is based on futures as well as cash prices. Given the risk aversion coefficient estimates for a sample of thirteen farmers, predicted crop-mixes are then obtained under the cases of insurance availability and no insurance. Results of the empirical study suggest that the Federal Crop Insurance program (in its pre-1980 version at least) does not have a significant impact on crop-mix. Finally, using the Arrow-Lind criterion of welfare assessment under uncertainty, the study casts doubt on the social desirability of the Federal Crop Insurance program.

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Typescript (photocopy). / Digitized by Kansas Correctional Industries

Farmers in the high plateau region of Algeria are assumed to exhibit risk averse behavior, particularly, due to highly variable weather conditions inducing income instability over time. This in turn directly affects their production behavior. The Eastern High Plateau (Setif) is not a homogeneous region. In the El-Eulma daira, for example, three different agroecological zones have been identified on the basis of climate, topography and soil quality. In addition, two distinct agricultural sectors (private and socialist) coexist side by side in each of the agroecological zones. This study constitutes an attempt to measure farmers' risk attitudes in three communes (El-Eulma, Oum Ladjoul and Beni Fouda) which are representative of the three agroecological zones of the El-Eulma daira. Farmers' risk attitudes were measured through the experimental approach developed by Binswanger in India. The technique used consisted of presenting the subjects, i.e. the farmers, with a set of alternative prospects involving real money. Based on the derived risk aversion coefficients, a series of tests was run to determine if farmers' risk attitudes are dependent on the zone and/or the sector. The effect of socioeconomic characteristics (age, schooling, number of working children, etc.) on partial risk aversion was analyzed. Finally, the derived risk aversion coefficients were used in a risk programming model (MOTAD) to determine optimal farming plans for private as well as socialist sector farmers. The experiment results indicate that regardless of the zone and the sector, farmers unanimously exhibit risk averse attitudes. At low payoff level, the distribution of risk preferences is more spread. A narrower distribution occurs at higher payoff levels (e.g. 200 DA scale). There was no evidence of significant difference among sites and between sectors. Also socioeconomic attributes correlate poorly with the estimated partial risk aversion coefficients. In the socialist sector major discrepancies between the risk programming model solutions and actual activity levels occured. They were expected because of the specific structure of this sector. The inclusion of government cropping pattern recommendations in the constraint matrix indicates that government interventions have a different effect on socialist farmers' welfare of the three zones. / Graduation date: 1986

Thesis (M.Ag.Bus.)--University of Adelaide, Dept. of Agronomy and Farming Systems, 2002. / "November 2002." Bibliography: leaves 73-80.

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This study describes how farmers manage climate variability in dryland crop production, and aims to contribute to the theory and practice of decision support for managing climate variability. The intent was to study farmer decision making to see how DSS could be used to deliver information and procedures on climate risk to farmers more effectively. The study investigated whether there are significant differences between farmers' subjective distributions of seasonal rainfall and its derivatives (such as crop yield and fallow recharge) and a probability distribution derived from long-term records and simulation models, and whether these differences in risk assessment lead to changes in the optimum decision. Subjective probability distributions of rainfall and its derivatives were collected from farmers and advisers and it was found the overall match between these and long term records and simulation models was close. This study found little evidence to support the role of DSS for routine decision making, but this does not lessen the value of distributions derived from simulation models. Rather, it provides an opportunity for both farmers and scientists to learn. / Doctor of Philosophy (PhD)

Please read the abstract in the section 00front of this document / Thesis (DCom (Financial Management))--University of Pretoria, 2006. / Financial Management / unrestricted

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