ACCOUNTING FOR RISK COEFFICIENTS IN RURAL AGRICULTURAL PRODUCERS' ENTERPRISE CHOICES
Keywords:
Risk coefficients, Rural agricultural producers, Linear programming and efficiency frontier.Abstract
The study looks at the problems of estimating variances and covariances used as measured of risk in designated farm planning tools. The triangular distribution technique which make use of the range as a measure of variability. is used to generate variance-covariance matrices for a selected representative group of Livestock producers (as an alternative methodology).
A linear programming risk simulation model. which used the variances and covariances generated through the aforementioned procedure. was specified to map out an Income-Risk (E-V) efficiency frontier for representative producers. The results confirm an earlier statement by Brennan (1982) that "the range is equally as efficient as any other sophisticated measure of risk .......... ".
