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Relative Profitability and Risk of Kansas Farms

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  • Langemeier, Michael
  • Fang, Xiaoyi
  • Yeager, Elizabeth

Abstract

This study examined the relationship between return on equity for individual Kansas farms and the S&P 500 using data from 1996 to 2018. Return on equity was measured with and without the inclusion of capital gains on land. Results indicated that return on equity with capital gains on land adjusted for risk was 1.2 percent above S&P returns during the period. For most of the farms in the sample, the risk faced by individual farms was not related to risk incorporated into the S&P 500 index, suggesting that there are opportunities for farm operations to diversify their risk by investing in the stock market.

Suggested Citation

  • Langemeier, Michael & Fang, Xiaoyi & Yeager, Elizabeth, 2020. "Relative Profitability and Risk of Kansas Farms," International Journal of Agricultural Management, Institute of Agricultural Management, vol. 9, July.
    • Handle: RePEc:ags:ijameu:329800
    DOI: 10.22004/ag.econ.329800
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    References listed on IDEAS

    as
    1. Timothy G. Baker & Michael D. Boehlje & Michael R. Langemeier, 2014. "Farmland: Is It Currently Priced as an Attractive Investment?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(5), pages 1321-1333.
    2. 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.
    3. Langemeier, Michael R., 2013. "Measuring Economies of Size with Expense Ratios," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2013, pages 1-14, June.
    Full references (including those not matched with items on IDEAS)

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    Keywords

    Farm Management; Risk and Uncertainty;

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