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Factors affecting variability in farm and off-farm income


  • Kenneth Poon
  • Alfons Weersink


Purpose - The purpose of this paper is to examine the factors affecting the relative variability in farm and off-farm income for Canadian farm operators. Design/methodology/approach - Variability of farm and off-farm income is analyzed using a dataset of 17,000 farm operators from 2001 to 2006. Relative ranking of the coefficients of variation (CV) for farm and off-farm income are compared across farm types and are regressed against factors conditioning the variations. Findings - Greater reliance on farm income results in lower (greater) relative variability in farm (off-farm) income. Larger commercial operations experience larger farm income volatility because they are less risk averse or they can manage more risk. Diversification and off-farm employment appear to be risk management strategies for commercial operations. Research limitations/implications - Government payments have a small, positive effect on farm and off-farm income variability, indicating this support leads farmers to take on more risky activities and/or reduce the use of self-insurance activities. Results could also be due to the lag between the time of the income reduction and the time in which the aid is received. Further research is necessary to decipher the effects of government support on farm decisions. Practical implications - The results on relative variation in the farm and off-farm income across farm type raises questions about whether government programs should target specific operations. Originality/value - While income variation remains a focus of public policy, factors affecting its variability are not well-understood. Studies have examined the level of farm income and the decision to participate in off-farm employment but none has examined the variance in both income sources.

Suggested Citation

  • Kenneth Poon & Alfons Weersink, 2011. "Factors affecting variability in farm and off-farm income," Agricultural Finance Review, Emerald Group Publishing, vol. 71(3), pages 379-397, November.
  • Handle: RePEc:eme:afrpps:v:71:y:2011:i:3:p:379-397

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    References listed on IDEAS

    1. Euan Phimister & Esperanza Vera-Toscano & Alfons Weersink, 2002. "Female Participation and Labor Market Attachment in Rural Canada," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(1), pages 210-221.
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    1. repec:spr:agfoec:v:5:y:2017:i:1:d:10.1186_s40100-017-0078-9 is not listed on IDEAS
    2. Kenneth Poon & Alfons Weersink, 2014. "Growing Forward with Agricultural Policy: Strengths and Weaknesses of Canada's Agricultural Data Sets," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 62(2), pages 191-218, June.
    3. repec:ags:polvaa:262398 is not listed on IDEAS
    4. Begin, Rosemarie & Tamini, Lota D. & Doyon, Maurice, 2014. "L'effet du travail hors-ferme sur l'efficacité technique des fermes laitières québécoises: un modèle intégrant les biais de sélection sur les observables et inobservables," Working Papers 187233, University of Laval, Center for Research on the Economics of the Environment, Agri-food, Transports and Energy (CREATE).
    5. Yann de Mey & Erwin Wauters & Dierk Schmid & Markus Lips & Mark Vancauteren & Steven Van Passel, 2016. "Farm household risk balancing: empirical evidence from Switzerland," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 43(4), pages 637-662.
    6. Rosemarie Bégin & Lota D. Tamini & Maurice Doyon, 2014. "L'effet du travail hors-ferme sur l'efficacité technique des fermes laitières québécoises: un modèle intégrant les biais de sélection sur les observables et inobservables," Cahiers de recherche CREATE 2014-9, CREATE.
    7. Enjolras, Geoffroy & Capitanio, Fabian & Aubert, Magali & Adinolfi, Felice, 2012. "Direct payments, crop insurance and the volatility of farm income. Some evidence in France and in Italy," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122478, European Association of Agricultural Economists.
    8. Sauer, Johannes & Finger, Robert, 2014. "Climate Risk Management Strategies in Agriculture – The Case of Flood Risk," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 172679, Agricultural and Applied Economics Association.
    9. Edward Knapp & Jason Loughrey, 2017. "The single farm payment and income risk in Irish farms 2005–2013," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 5(1), pages 1-15, December.
    10. repec:ags:polvaa:268634 is not listed on IDEAS
    11. de Mey, Yann & Wauters, Erwin & Lips, Markus & Schmid, Dirk & Vancauteren, Mark & Van Passel, Steven, 2014. "Farm household risk balancing in Switzerland and Belgium: an econometric and survey approach," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 186678, European Association of Agricultural Economists.
    12. Mzyece, Agness, 2018. "Crop Diversification Improves Technical Efficiency and Reduces Income Variability in Northern Ghana," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266608, Southern Agricultural Economics Association.
    13. Hadrich, Joleen C. & Pendell, Dustin L. & Kim, Youngjune, 2018. "The effect of financial structure and efficiency on Kansas farm growth," 2018 Annual Meeting, August 5-7, Washington, D.C. 274110, Agricultural and Applied Economics Association.
    14. Rosch, Stephanie D., 2017. "Risk Attitudes of US Agricultural Producers," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258025, Agricultural and Applied Economics Association.
    15. Key, Nigel & Prager, Daniel & Burns, Christopher, 2015. "Household Income Volatility in U.S. Farm Households," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205407, Agricultural and Applied Economics Association.


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