SOUTHERN JOURNAL OF AGRICULTURAL ECONOMICS DECEMBER, 1986 ACREAGE PLANTING DECISION ANALYSIS OF SOUTH CAROLINA TOMATOES: NERLOVIAN VERSUS JUST RISK MODEL

Abstract tions are evaluated to ascertain the impor-tance of risk in terms of explanatory andFactors which explain supply response be- recasi erforecasting power.havior of South Carolina tomato growers were Farmers ' decisions to plant a certain num-determined. Two well known supply re-odetermined. To werdll known supply re- ber of acres are based on the information sponse models were used for comparison: available before planting. Traditional ap-the Nerlovian structural model and the Just ches to e iionain a-proaches to analyze decisionmaking by farm-risk model. The Just risk model reflected the ae been co d i e ec significance of the risk effect in both stable r e xpectaons or ed t eff of and unstable periods. An evaluation of fore- price eectatns rlate r ast casting power between the two models was pices. Inorpo rated uncertainty in suly rehave incorporated uncertainty in supply re-indeterminate. Growers are apparently will- s e mod un ernt ulinssponse models using different formulationsing to invest in more information with in- osk variables. Various formulations of risk of risk variables. Various formulations of risk creased market instability because growers have been used to explain the variability of were influenced by the Florida winter price decision variables. of tomatoes in planting decisions during the The concept of risk as it affects behavioral period of instability. decisionmaking originated from the princi-Key words: supply response, uncertainty, in- ple of Bernoullian expected utility; i.e., th