Diversification: an essential approach in a tough economy

“Successful farming businesses in South Africa today are often well-diversified, with interests both on-farm and off-farm, and frequently operating in two or more regions. Not long ago, diversification was a buzzword thrown around at almost every agricultural conference or meeting. But what exactly is diversification? In short, it is a technique that reduces risk by allocating investments among various financial instruments (in this case, agricultural products), industries or other categories. It aims to maximise returns by investing in a number of areas, each of which would react differently to the same event. Agricultural economists preach diversification to farmers to help them spread risk, and most farmers diversify within a