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The Effects of Holding Nonfarm Related Financial Assets On Risk-Adjusted Farm Income

Published online by Cambridge University Press:  28 April 2015

Eustacius N. Betubiza  and
David J. Leatham
Eustacius N. Betubiza
Affiliation:
World Bank, Washington, D.C.
David J. Leatham
Affiliation:
Texas A&M University, College Station, Texas
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Abstract

A discrete stochastic programming model is formulated to study the gains from diversification when farming operations are augmented with off-farm financial assets that are not highly correlated with returns from farming. We extend past research by considering the dynamics of accumulating these financial assets and the farm's leverage and tenure position. Results show that farmers' income level and stability can be improved by including nonfarm financial assets in their portfolios.

Keywords

Agricultural financecertainty equivalentsdiscrete stochastic programmingland investmentoff-farm investments
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 26 , Issue 2 , December 1994 , pp. 565 - 579
Copyright
Copyright © Southern Agricultural Economics Association 1994

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