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Another Look at Returns to Agricultural and Nonagricultural Assets

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  • Bruce Bjornson
  • Robert Innes

Abstract

This paper presents econometric tests of whether mean returns on agricultural assets have been higher or lower than those on comparable-risk assets in nonagricultural capital markets. The tests are based on alternate maintained hypotheses that the capital asset pricing model (CAPM) or the arbitrage pricing theory (APT) characterize nonagricultural asset returns. Results indicate that mean returns to farmer-operators have been lower than those to owners of comparable-risk nonagricultural assets and that mean returns to farmland owners have been higher than those to owners of comparable-risk nonagricultural assets.

Suggested Citation

  • Bruce Bjornson & Robert Innes, 1992. "Another Look at Returns to Agricultural and Nonagricultural Assets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(1), pages 109-119.
    • Handle: RePEc:oup:ajagec:v:74:y:1992:i:1:p:109-119.
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    File URL: http://hdl.handle.net/10.2307/1242995
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    Citations

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    Cited by:

    1. Loren Tauer, 2002. "Estimating risk‐adjusted interest rates for dairy farms," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 62(1), pages 59-68, May.
    2. Dehong Gu, 1996. "Capital Asset Pricing And Agricultural Assets In England And Wales," Journal of Agricultural Economics, Wiley Blackwell, vol. 47(1‐4), pages 99-108, January.
    3. Justyna Franc-Dąbrowska & Magdalena Mądra-Sawicka & Joanna Bereżnicka, 2018. "Cost of Agricultural Business Equity Capital—A Theoretical and Empirical Study for Poland," Economies, MDPI, vol. 6(3), pages 1-15, June.
    4. Erickson, Kenneth W. & Mishra, Ashok K. & Moss, Charles B., 2001. "Rates Of Return In The Farm And Non-Farm Sectors: A Time Series Comparison," 2001 Annual Meeting, July 8-11, 2001, Logan, Utah 36148, Western Agricultural Economics Association.
    5. Madden, B. J. & Malcolm, Bill, 1996. "Deciding on the Worth of Agricultural Land," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 64(02), pages 1-14, August.
    6. 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.
    7. Blank, Steven C., 2001. "Globalization, Cropping Choices, and Profitability in American Agriculture," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 33(2), pages 315-326, August.
    8. Todd Kuethe & Todd Hubbs & Mitch Morehart, 2014. "Farmland returns and economic conditions: a FAVAR approach," Empirical Economics, Springer, vol. 47(1), pages 129-142, August.
    9. Hanson, Steven D., 1999. "A Simple Framework For Determining The Fundamental Agricultural-Use Value Of Michigan Farmland," Staff Paper Series 11641, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    10. Steven C. Blank, 2002. "A Portfolio Of Threats To American Agriculture," Contemporary Economic Policy, Western Economic Association International, vol. 20(4), pages 381-393, October.
    11. Gustafson, Cole R. & Chama, Sydney L., 1992. "Savings and Investments of North Dakota Farmers," Agricultural Economics Miscellaneous Reports 51171, North Dakota State University, Department of Agribusiness and Applied Economics.
    12. Raboy, David G. & Basher, Syed Abul & Hossain, Ishrat & Kaitibie, Simeon, 2012. "More efficient production subsidies for emerging agriculture in micro Arab states: a conceptual model," MPRA Paper 38854, University Library of Munich, Germany.
    13. 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.
    14. Noumir, Ashraf & Langemeier, Michael, 2020. "Farmland Investment: A Portfolio Perspective," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2020.
    15. 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.
    16. Dahl, Cody P. & Gunderson, Michael A. & Moss, Charles B., 2011. "Assessing the Rationality of Farmland Price Movements," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103827, Agricultural and Applied Economics Association.
    17. Phillips, W. & Bauer, L. & Akabua, K., 1993. "Returns to Farmland Investment in Alberta, 1964-89," Project Report Series 232373, University of Alberta, Department of Resource Economics and Environmental Sociology.
    18. Shiha, Amr N. & Chavas, Jean-Paul, 1992. "Capital Market Segmentation and US Farm Real Estate Pricing: A Study of the Effects of Barriers to Nonfarm Equity Capital in Agriculture," Staff Papers 200559, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.

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