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Equity financing and investment opportunities in Canadian primary agriculture

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  • Painter, Marvin J.

Abstract

This study shows that for the period 1990–2007, international portfolio investment performance was significantly improved with the addition of Canadian farmland. Farmland in Canada is considered relatively low risk, enters the efficient portfolios at low risk levels and adds the most financial improvement to low and medium risk portfolios. Compared with T-bills and long bonds, farmland has higher risk and yield, but lower risk than stocks. Compared with stocks, farmland has income yields and risk that are similar to or better than dividend yields and risk on stocks while farmland has capital gain yields and risk that are usually lower, on average, than stocks. The low and negative correlation of farmland yields with stocks and bonds make it a good candidate for portfolio diversification benefits.

Suggested Citation

  • Painter, Marvin J., 2010. "Equity financing and investment opportunities in Canadian primary agriculture," AFBM Journal, Australasian Farm Business Management Network, vol. 7(1), pages 1-8, October.
    • Handle: RePEc:ags:afbmau:120867
    DOI: 10.22004/ag.econ.120867
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    References listed on IDEAS

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    1. Libbin, James D. & Kohler, Jeremy D. & Hawkes, Jerry M., 2004. "Does Modern Portfolio Theory Apply to Agricultural Land Ownership? Concepts for Farmers and Farm Managers," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2004, pages 1-12.
    2. Marvin J. Painter, 2000. "Should Saskatchewan Farmland be Part of Your Investment Portfolio?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 48(1), pages 39-50, March.
    3. Bigge, Holly M. & Langemeier, Michael R., 2004. "Relative Profitability and Risk of Kansas Farms and S&P 500," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2004, pages 1-7.
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    Keywords

    Farm Management;

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