Cash flow risk ratio : an aid to marketing decisions
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Date
Authors
Geyser, Mariette
Journal Title
Journal ISSN
Volume Title
Publisher
Agricultural Economics Association of South Africa
Abstract
In the past, the fully regulated marketing environment allowed producers to neglect or ignore the marketing side of their business. Now, with an open marketing system and increased volatility in the commodity markets, producers will have the right and the responsibility to determine their own financial security. One of the most difficult questions for producers to
answer, is how much of his/her crop must be pre-harvest marketed. Knowing his/her production costs (both variable and fixed) and range of acceptable production, price, and financial risks are the key to determining higher price objective. Producers can determine their degree of marketing flexibility by using the cash flow risk ratio. This ratio predicts what percentage of the projected crop must be marketed at the expected season average price to meet cash obligations. In this uncertain and risky future, failing to plan may be the same as planning to fail.
Description
Keywords
Commodity markets, Open marketing systems, Pre-harvest marketing, Production costs
Sustainable Development Goals
Citation
Geyser, M 1999, 'Cash flow risk ratio: an aid to marketing decisions', Agrekon, vol. 39, no. 1, pp. 36-45. [http://www.aeasa.org.za]