Economic instability and choices involving income and risk In livestock and poultry production

This study is an empirical one dealing particularly with adjustments to uncertainty. Its purposes are (1) to evaluate price factors contributing to uncertainty in livestock production, (2) to measure income variability for different enterprises and (3) to test different patterns of diversification as means of reducing income variability. To accomplish these ends, data were drawn from a reconstruction of income experience for 10 livestock and poultry enterprises over a period of 32 years. These budgets assumed average physical productivity and used Iowa annual prices. Price fluctuations are the factors of most importance in contributing to uncertainty in livestock production. Variation of total costs and gross income combine to cause high variability of net income and feed returns. The correlation between total cost and gross income also has some bearing on net income variability