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Risk and Return Dimensions: Cow-Calf and Grain Enterprise Combinations

Author

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  • Bauer, Leonard
  • Novak, Frank

Abstract

The majority of calf production in Alberta occurs in conjunction with grain growing enterprises. This study hypothesized that a major reason for this occurrence is the risk reduction opportunities which arise from on farm "portfolios" of grain and cattle. Annual rates of return were calculated over an 11 year period (1979-1989) for a 100 head cow herd in east central Alberta, and then compared to the performance of investments in grain growing land over the same period. The returns from cow-calf production were found to be uncorrelated with the returns from investment in grain growing land. In order to improve the length of the data series, correlations were also computer between the revenue from cattle and grain production, over an 18 year period (1974-1991). Revenues from grain and cattle were similiarly found to be uncorrelated with each other, leading to the conclusion that joint production of grain and cattle does, significantly, reduce the degree of risk exposure.

Suggested Citation

  • Bauer, Leonard & Novak, Frank, 1993. "Risk and Return Dimensions: Cow-Calf and Grain Enterprise Combinations," Project Report Series 232379, University of Alberta, Department of Resource Economics and Environmental Sociology.
    • Handle: RePEc:ags:ualbpr:232379
    DOI: 10.22004/ag.econ.232379
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    File URL: https://ageconsearch.umn.edu/record/232379/files/ualberta-projectreports-93-11.pdf
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    References listed on IDEAS

    as
    1. Leonard Bauer, 1990. "Risk and Returns in Agricultural Assets measurement Issues," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 38(4), pages 667-675, December.
    2. Bauer, Leonard, 1990. "Risk and Returns in Agricultural Assets Measurement Issues," Staff Paper Series 232490, University of Alberta, Department of Resource Economics and Environmental Sociology.
    3. Mumey, G.A. & Bauer, L. & Boyda, A., 1988. "An Estimate of Risk and Returns From Cropping Alternatives," Project Report Series 232065, University of Alberta, Department of Resource Economics and Environmental Sociology.
    4. Glen Mumey & Bob Burden & Ann Boyda, 1992. "Measurement of Farm Risk: Alberta Crop Production," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 40(1), pages 71-91, March.
    Full references (including those not matched with items on IDEAS)

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