A Portfolio Analysis of Returns to Farm Equity and Assets

A portfolio analysis was used to determine the optimal investment into alternative types of Kansas farms by nonfarm investors. Dairy and crop farms would enter the optimal portfolio if asset values would fall by 4.8 percent and 31.3 percent, respectively. Study results show that swine and irrigated crop farms have earned competitive return rates with common stocks and T-Bills from 1973-1985. Results suggest that many Kansas farmers would have been better off with less debt. Arrangements to transfer nonfarm equity into agriculture will continue to be an area needing study.