TACTICAL OPPORTUNITIES, RISK ATTITUDE AND CHOICE OF FARMING STRATEGY - AN APPLICATION OF THE DISTRIBUTION METHOD

When assessing farming strategies, it is important to account for the opportunities provided for tactically adjusting to outcomes of risk. T he hypothesis that accounting for tactical adjustment is more importan t than accounting for risk attitude was supported in this study with r egard to identifying the optimal drainage recirculation strategy for a n irrigated dairy farm. Failing to account for tactical adjustment wou ld lead to a sub-optimal choice, costing the farmer about A$3100 in pr esent value terms. In contrast, failing to account for risk aversion w ould not affect the strategy chosen. The distribution method was found to be well suited to modelling tactical adjustment.