Does Modern Portfolio Theory Apply to Agricultural Land Ownership? Concepts for Farmers and Farm Managers

Farmers often have cash flow problems, although many build substantial wealth with the appreciation on their most valuable asset, land. Many agricultural products often consider diversification differently than the typical financial investor may. Agricultural producers usually only consider diversification approaches only within the farm itself, although there may be considerable benefits from truly financially diversifying beyond the farm enterprise. This article provides a theoretical link between financial market concepts and the desire of farmers, farm owners, and farm managers to maximize total income and minimize aggregate income risk.