Risk and uncertainty are pervasive phenomena in production agriculture. Many factors, including weather events, diseases, insect infestations, general economic conditions, the development and adoption of technological innovations, and public and private institutional policies.,interact to create a unique decision making environment for the agricultural producer. General economic conditions in the economy, particularly the inflation rate, have increased prices paid by farm operators for operating inputs and capital equipment, but have had relatively little impact on prices received for products produced in the atomistic, decreasing cost agricultural industry. Rapid increases in input costs have squeezed net returns, created cash flow problems and increased the vulnerability of the firm to financial disaster.