Determinants of investments in non-farm assets by farm households

Teresa Serra, Barry K. Goodwin, Allen M. Featherstone

Research output: Contribution to journalArticle

Abstract

Off-farm investment decisions of farm households are analyzed. Farm-level data for a sample of Kansas farms observed from 1994 through 2000 are utilized. A system of censored dependent variable models is estimated to investigate the factors that influence the composition of farm households’ portfolios. The central question underlying the analysis is whether farm income variability influences off-farm investment decisions. Previous analyses on the determinants of non-farm investments have failed to consider the role of income variability. Results of this study indicate that higher farm income fluctuations increase the relevance of non-farm assets in the farm household portfolio, thus suggesting these assets are used as farm household income risk management tools.

Original languageEnglish (US)
Pages (from-to)17-32
Number of pages16
JournalAgricultural Finance Review
Volume64
Issue number1
DOIs
StatePublished - May 5 2004
Externally publishedYes

Keywords

  • Farm income variability
  • Offfarm investments
  • Risk management

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics, Econometrics and Finance (miscellaneous)

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