A multiperiod risk‐programming model is developed to evaluate forward contracting and other financial choices for farmers who are subject to market risks and external credit rationing. The model utilizes mean‐variance analysis to derive sets of E‐V efficient growth plans reflecting the influence of contracting on income stability, levels of credit, and income growth. A case farm is used to develop the model's decision elements and to survey the credit responses of lenders to contract choices. Model results indicate that the lenders' credit responses may modify the producer's contracting plans and his rate of income growth.
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Barry et al. (1976) studied this question.