RISK PERCEPTIONS AND MANAGEMENT RESPONSES OF ARIZONA DAIRY PRODUCERS

Most economic modeling hag characterized risk as output price and yield variablity. However, recent research has revealed that other economic, social, and political factors contribute to risk in the decision making process. Arizona dairy producers were interviewed concerning their perceptions and responses to risk. Seventy producers out of a population of 105 responded to the questionnaire. It was found that the six most important sources of risk as perceived by dairymen were input prices, prices of output, weather, diseases, government programs, and concerns associated with hired labor. The top six management responses to risk were use of consultants, communication with hired labor, management information systems, forward contracting, maintaining feed reserves, and debt management. The socioeconomic characteristics of each dairyman was recorded and compared to his perceptions and responses to risk. The socioeconomic factors used were age, education level, years of dairy experience, income, size of dairy, legal form of business, net worth, and debt levels. How producers perceived and responded to risk was somewhat determined by their individual socioeconomic characteristics

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