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Returns to Capital in Agriculture: A Historical View Using Portfolio Theory

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  • Sherrick, Bruce J.
  • Irwin, Scott H.
  • Forster, D. Lynn

Abstract

Returns from various U.S. capital assets are used to construct efficient investment portfolios for four time periods in the post-WWII era. These efficient portfolios show a higher proportion of farm real estate than are actually observed. Conclusions are that returns to farm real estate may have been high relative to their risk.

Suggested Citation

  • Sherrick, Bruce J. & Irwin, Scott H. & Forster, D. Lynn, 1986. "Returns to Capital in Agriculture: A Historical View Using Portfolio Theory," 1986 Annual Meeting, July 27-30, Reno, Nevada 278457, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea86:278457
    DOI: 10.22004/ag.econ.278457
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    File URL: https://ageconsearch.umn.edu/record/278457/files/aaea-1986-160.pdf
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    References listed on IDEAS

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    1. Bryan Schurle & Bernard L. Erven, 1979. "Sensitivity of Efficient Frontiers Developed for Farm Enterprise Choice Decisions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(3), pages 506-511.
    2. William F. Sharpe, 1964. "Capital Asset Prices: A Theory Of Market Equilibrium Under Conditions Of Risk," Journal of Finance, American Finance Association, vol. 19(3), pages 425-442, September.
    3. Tim T. Phipps, 1984. "Land Prices and Farm-Based Returns," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(4), pages 422-429.
    4. Peter J. Barry, 1980. "Capital Asset Pricing and Farm Real Estate," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(3), pages 549-553.
    5. Emanuel Melichar, 1979. "Capital Gains versus Current Income in the Farming Sector," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(5), pages 1085-1092.
    6. K. J. Thomson & P. B. R. Hazell, 1972. "Reliability of Using the Mean Absolute Deviation to Derive Efficient E,V Farm Plans," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 54(3), pages 503-506.
    7. Lee, Warren F. & Rask, Norman, 1976. "Inflation And Crop Profitability: How Much Can Farmers Pay For Land?," 1976 Annual Meeting, August 15-18, State College, Pennsylvania 283820, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Warren F. Lee & Norman Rask, 1976. "Inflation and Crop Profitability: How Much Can Farmers Pay for Land?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 58(5), pages 984-990.
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    Cited by:

    1. Bjornson, Bruce & Innes, Robert, 1992. "Risk And Return In Agriculture: Evidence From An Explicit-Factor Arbitrage Pricing Model," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 17(2), pages 1-21, December.
    2. Teresa Serra & Barry K. Goodwin & Allen M. Featherstone, 2004. "Determinants of investments in non‐farm assets by farm households," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 64(1), pages 17-32, May.

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