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A Portfolio Analysis of Returns to Farm Equity and Assets

Author

Listed:
  • Mario F. Crisostomo
  • Allen M. Featherstone

Abstract

A portfolio analysis was used to determine the optimal investment into alternative types of Kansas farms by nonfarm investors. Dairy and crop farms would enter the optimal portfolio if asset values would fall by 4.8 percent and 31.3 percent, respectively. Study results show that swine and irrigated crop farms have earned competitive return rates with common stocks and T-Bills from 1973–1985. Results suggest that many Kansas farmers would have been better off with less debt. Arrangements to transfer nonfarm equity into agriculture will continue to be an area needing study.

Suggested Citation

  • Mario F. Crisostomo & Allen M. Featherstone, 1990. "A Portfolio Analysis of Returns to Farm Equity and Assets," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 12(1), pages 9-21.
    • Handle: RePEc:oup:revage:v:12:y:1990:i:1:p:9-21.
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    File URL: http://hdl.handle.net/10.1093/aepp/12.1.9
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    Cited by:

    1. Songjiao Chen & William W. Wilson & Ryan Larsen & Bruce Dahl, 2015. "Investing in Agriculture as an Asset Class," Agribusiness, John Wiley & Sons, Ltd., vol. 31(3), pages 353-371, June.
    2. Mishra, Ashok K. & El-Osta, Hisham S. & Morehart, Mitchell J. & Johnson, James D. & Hopkins, Jeffrey W., 2002. "Income, Wealth, And The Economic Well-Being Of Farm Households," Agricultural Economic Reports 33967, United States Department of Agriculture, Economic Research Service.
    3. Teresa Serra & Barry K. Goodwin & Allen M. Featherstone, 2004. "Determinants of investments in non‐farm assets by farm households," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 64(1), pages 17-32, May.
    4. Larsen, Ryan A. & Vedenov, Dmitry V. & Leatham, David J., 2009. "Enterprise-level risk assessment of geographically diversified commercial farms: a copula approach," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46763, Southern Agricultural Economics Association.
    5. Andersson, Hans & Ramaswami, Bharat & Moss, Charles B. & Erickson, Kenneth W. & Hallahan, Charles B. & Nehring, Richard F., 2005. "Off-farm Income and Risky Investments: What Happens to Farm and Nonfarm Assets?," 2005 Annual meeting, July 24-27, Providence, RI 19480, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Mark A. Sunderman & Ronald W. Spahr & John W. Birch & Russell M. Oster, 2000. "Impact of Ranch and Market Factors on an Index of Agricultural Holding Period Returns," Journal of Real Estate Research, American Real Estate Society, vol. 19(2), pages 209-234.
    7. Seo, Sangtaek & Mitchell, Paul D. & Leatham, David J., 2008. "Risk Sharing and Incentives with External Equity Financing and Crop Insurance," Staff Papers 92204, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    8. Monke, James D., 1998. "Retirement Planning By Farmers: Opportunities In The Taxpayer Relief Act Of 1997," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20815, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. Mandal, Maitreyi & Lagerkvist, Carl Johan, 2012. "A Comparison of Traditional and Copula based VaR with Agricultural portfolio," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124387, Agricultural and Applied Economics Association.
    10. Mishenin, Yevhen & Marekha, Iryna & Yarova, Inessa & Kovalova, Olha & Pizniak, Tetiana, 2022. "Optimizing a portfolio of agri-environmental investments," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 8(1), March.

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