EVALUATING ELICITATION METHODS FOR CUMULATIVE DISTRIBUTION FUNCTIONS OF WHEAT AND MAIZE PRICES / EVALUERING VAN METODES VIR DIE BEPALING VAN KUMULATIEWE WAARSKYNLIKHEIDSVERDELINGS VAN KORING- EN MIELIEPRYSE

Abstract

Price variability is an important component of total risk mid needs to be fully accounted fur at enterprise level. Cumulative distribution functions for product prices, elicited by means of subjective probabilities, represent an approach to obtain more reliable economic results. Consequently the objective of this article is to evaluate alternative subjective probability elicitation methods. Seven experts in the field of grain trade were involved in eliciting current product price distributions for wheat arid yellow maize. A whole farm simulation model was used to generate cumulative price distributions for each of three elicitation methods. A typical farm, consisting of 300 hectares cropland, was selected to determine the effect that the price distributions have on whole farm economic performance. Deviations among price distributions, caused by individuals' varying opinions, are more significant than the effect of the three elicitation methods. The economic results at whole farm level confirm the importance of price variability arid the magnitude of price risk. All in all, the results prompt more attention to be devoted to the elicitation process itself to assure that the subjective distribution function reflects the decision-markers' perceptions accurately.

Pryswisselvalligheid is 'n belangrike faset van totale risiko en gevolglik moet dit op ondernemingsvlak verreken word. 'n Benadering om betroubare ekonomiese resultate op ondernemingvlak te bekom is die gebruik van kumulatiewe waarskynlikheidsverdelings van produkpryse wat op subjektiewe waarskynlikhede gegrond is. Gevolglik is die doe1 van hierdie artikel die evaluering van verskillende metodes om subjektiewe waarskylikhede te bekom. Die kundigheid van save persone betrokke by graanhandel is gebruik om verdelings vir huidige koring- en mieliepryse te bepaal. Kumulatiewe prysverdelings is vir elk van die drie metodes gegenereer deur middel van 'n geheelplaas simulasiemodel. 'n Verteenwoordigende boerdery bestaande vit 300 hektaar lande is gekies om die invloed van prysverdelings op ekonomiese prestasie op plaasvlnk te bepaal. Die sienswyses van individue het 'n groter invloed op afwykings tussen prysverdelings as wat die gevalg van die gebruik van verskillende metodes is. Die belangrikheid van pryswisselvalligheid en die onwang van prysrisiko word deur die ekonomiese resultate op plaasvlak bepestig. In geheel gesien noodsaak die resultate dat meer klem geplaas word op die wyse waarop subjektiewe waarskynlikhede bekom word. Sodoende kan besluitnemers se persepsies meer akkuraat weergegee word.