Abstract
AbstractThe concepts of systematic and nonsystematic risk are evaluated as risk measures in farm planning models. A diagonal quadratic programming model based upon a single‐index model yields farm plans similar to the full variance‐covariance quadratic program with four of thirteen farm plans being identical. Surprisingly, a linear programming model using only systematic risk produces farm plans that are identical to the full variance‐covariance quadratic program for eleven of thirteen income levels. Accordingly, it is suggested that single‐index‐based programming models may prove to be practical alternatives for deriving mean‐variance‐efficient farm plans.
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