THE ECONOMICS OF BROILER, GRAIN, AND TROUT PRODUCTION AS A RISK DIVERSIFICATION STRATEGY

A comprehensive farm-level stochastic and dynamic capital budgeting si mulation model (AQUASIM) is used to evaluate the economic benefits of incorporating a small-scale trout enterprise with a grain and broiler farm. The simulation results indicate that combining aquaculture produ ction with traditional agriculture increased expected income and reduc ed risk substantially. The use of external debt capital improved the a fter-tax net present values and internal rates of return but lowered n et cash farm income. This study shows the importance of enterprise div ersification in stabilizing variability in expected income.