Farm firm growth under conditions of variable and uncertain outputs : the case of dryland farms in the southern high plains of Texas

Abstract

This study is an attempt to analyze the growth process of farm firms within a framework of uncertain outputs. The planning model used consists of a long term plan based on an output planning parameter defined as expected values. At the end of each year, the plan for that year is evaluated in terms of simulated output values (assumed to be the actual output values). Evaluating the plan of a given year will determine its financial outcome and at the same time finalize the plan for the year just ahead. The procedure is continued in a step-wise fashion until the end of the planning horizon has been reached. This planning procedure is used to study the effect of expectation or the planning parameter, credit availability and resource competition on the survival and growth of dryland farms. Within a framework of maximizing firm growth, the results were unrealistic or non-typical in that annual expansion in terms of land operated appeared to be too great. The rapid expansion resulted from the assumption that land was available in unlimited quantities. ...