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Investing in Agriculture as an Asset Class

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  • Chen, Songjiao
  • Wilson, William W.
  • Larsen, Ryan A.
  • Dahl, Bruce L.

Abstract

There has been massive investment in agricultural assets including farmland, handling and trading, technology, fertilizer, and others. Studies about investing in farmlands have been extensive, but have limited focus on investing IN non-farmland agricultural assets. This paper analyzes the role of farmland and other agricultural investments in class-specific portfolios. We use the Copula-VaR and Copula-VaR with restrictions methods to find, compare, and contrast the optimal portfolio compositions among US farmlands, classified agricultural equities, and grain futures. The results illustrate that farmland is attractive as an investment. However, as risk tolerance is increased, a shift to other agricultural assets would potentially bring higher returns.

Suggested Citation

  • Chen, Songjiao & Wilson, William W. & Larsen, Ryan A. & Dahl, Bruce L., 2013. "Investing in Agriculture as an Asset Class," Agribusiness & Applied Economics Report 147053, North Dakota State University, Department of Agribusiness and Applied Economics.
    • Handle: RePEc:ags:nddaae:147053
    DOI: 10.22004/ag.econ.147053
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    Cited by:

    1. Awudu, Iddrisu & Wilson, William & Dahl, Bruce, 2016. "Hedging strategy for ethanol processing with copula distributions," Energy Economics, Elsevier, vol. 57(C), pages 59-65.
    2. Noumir, Ashraf & Langemeier, Michael, 2022. "Risk and return of heterogenous farmland locations and qualities," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 25(4), September.
    3. Watts, Natasha & Scales, Ivan R., 2020. "Social impact investing, agriculture, and the financialisation of development: Insights from sub-Saharan Africa," World Development, Elsevier, vol. 130(C).
    4. Hector O. Zapata & Junior E. Betanco & Maria Bampasidou & Michael Deliberto, 2023. "A Cyclical Phenomenon among Stock & Commodity Markets," JRFM, MDPI, vol. 16(7), pages 1-13, July.
    5. Feng, Xiaoguang & Hayes, Dermot J., 2016. "Vine-copula Based Models for Farmland Portfolio Management," ISU General Staff Papers 201601010800001019, Iowa State University, Department of Economics.
    6. William W. Wilson & Lee Vetsch & David W. Bullock, 2022. "Valuing an agricultural technology startup using real options," Agribusiness, John Wiley & Sons, Ltd., vol. 38(4), pages 771-785, October.
    7. Antoine Ducastel & Ward Anseeuw, 2017. "Agriculture as an asset class: reshaping the South African farming sector," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 34(1), pages 199-209, March.
    8. Stefan Ouma, 2020. "This can(’t) be an asset class: The world of money management, “society†, and the contested morality of farmland investments," Environment and Planning A, , vol. 52(1), pages 66-87, February.

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    More about this item

    Keywords

    Agricultural Finance; Farm Management; Financial Economics; Land Economics/Use;
    All these keywords.

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