Risk-adjusted farm returns and farm size

IF 1.5 Q3 AGRICULTURAL ECONOMICS & POLICY

Agricultural Finance Review Pub Date : 2023-06-01 DOI:10.1108/afr-06-2022-0070

Ashraf Noumir, M. Langemeier, Mindy L. Mallory

{"title":"Risk-adjusted farm returns and farm size","authors":"Ashraf Noumir, M. Langemeier, Mindy L. Mallory","doi":"10.1108/afr-06-2022-0070","DOIUrl":null,"url":null,"abstract":"PurposeThe average U.S. farm size has risen dramatically over the last three decades. Motives for this trend are the subject of a large body of literature. This study incorporates farm size risk and return analysis into this research stream. In this paper, cross-sectional and temporal relations between farm size and returns are examined and characterized.Design/methodology/approachRelying on farm level panel data from Kansas Farm Management Association (KFMA) for 140 farms from 1996 to 2018, this article examines the relationship between farm size and returns and investigates whether farm size is related to risk. Two measures of farm returns are used: excess return on equity and risk-adjusted return on equity. Value of farm production and total farm acres are used as measures of farm size.FindingsFindings suggest a significant and positive relationship between farm size and excess return on equity as well as farm size and risk-adjusted return on equity. However, this return premium associated with farm size is not associated with additional risk. Stated differently, farm size can be viewed as a farm characteristic that is associated with higher return without additional risk.Practical implicationsThese findings provide further support for ongoing farm consolidation.Originality/valueThe results suggest the trend towards consolidation in production agriculture is likely to continue. Larger farms bear less risk.","PeriodicalId":46748,"journal":{"name":"Agricultural Finance Review","volume":" ","pages":""},"PeriodicalIF":1.5000,"publicationDate":"2023-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Agricultural Finance Review","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1108/afr-06-2022-0070","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"AGRICULTURAL ECONOMICS & POLICY","Score":null,"Total":0}

引用次数: 0

Abstract

PurposeThe average U.S. farm size has risen dramatically over the last three decades. Motives for this trend are the subject of a large body of literature. This study incorporates farm size risk and return analysis into this research stream. In this paper, cross-sectional and temporal relations between farm size and returns are examined and characterized.Design/methodology/approachRelying on farm level panel data from Kansas Farm Management Association (KFMA) for 140 farms from 1996 to 2018, this article examines the relationship between farm size and returns and investigates whether farm size is related to risk. Two measures of farm returns are used: excess return on equity and risk-adjusted return on equity. Value of farm production and total farm acres are used as measures of farm size.FindingsFindings suggest a significant and positive relationship between farm size and excess return on equity as well as farm size and risk-adjusted return on equity. However, this return premium associated with farm size is not associated with additional risk. Stated differently, farm size can be viewed as a farm characteristic that is associated with higher return without additional risk.Practical implicationsThese findings provide further support for ongoing farm consolidation.Originality/valueThe results suggest the trend towards consolidation in production agriculture is likely to continue. Larger farms bear less risk.

查看原文本刊更多论文

风险调整后的农场回报和农场规模

在过去的三十年里，美国农场的平均规模急剧上升。这一趋势的动机是大量文献的主题。本研究将农场规模风险与收益分析纳入本研究流程。本文对农场规模与收益之间的横截面关系和时间关系进行了研究和表征。根据堪萨斯州农场管理协会(KFMA) 1996年至2018年140个农场的农场水平面板数据，本文研究了农场规模与回报之间的关系，并调查了农场规模是否与风险相关。采用了两种衡量农场回报的方法:超额股本回报率和风险调整后的股本回报率。农场产值和农场总面积被用来衡量农场规模。研究结果表明，农场规模与超额股本回报率以及农场规模与风险调整后的股本回报率之间存在显著的正相关关系。然而，与农场规模相关的回报溢价与额外风险无关。换句话说，农场规模可以被视为一种农场特征，它与没有额外风险的高回报有关。这些发现为正在进行的农场整合提供了进一步的支持。研究结果表明，农业生产整合的趋势可能会继续下去。较大的农场承担的风险较小。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

求助全文

约1分钟内获得全文求助全文

来源期刊

Agricultural Finance Review AGRICULTURAL ECONOMICS & POLICY-

CiteScore

3.70

自引率

18.80%

发文量

期刊介绍： Agricultural Finance Review provides a rigorous forum for the publication of theory and empirical work related solely to issues in agricultural and agribusiness finance. Contributions come from academic and industry experts across the world and address a wide range of topics including: Agricultural finance, Agricultural policy related to agricultural finance and risk issues, Agricultural lending and credit issues, Farm credit, Businesses and financial risks affecting agriculture and agribusiness, Agricultural policies affecting farm or agribusiness risks and profitability, Risk management strategies including the use of futures and options, Rural credit in developing economies, Microfinance and microcredit applied to agriculture and rural development, Financial efficiency, Agriculture insurance and reinsurance. Agricultural Finance Review is committed to research addressing (1) factors affecting or influencing the financing of agriculture and agribusiness in both developed and developing nations; (2) the broadest aspect of risk assessment and risk management strategies affecting agriculture; and (3) government policies affecting farm profitability, liquidity, and access to credit.