Assessing Agricultural Risk Among States

Agricultural return risk for each stale in the U.S. Is compared with aggregate agricultural risk. The Capital Asset Pricing Model is used to examine the systematic and the unsystematic nature of risk within individual states and regions. CAPM provides a quantitative estimate (beta) of the sensitivit...

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Bibliographic Details
Published in:Journal of the American Society of Farm Managers and Rural Appraisers 2001-01, p.107-114
Main Authors: Daniel, M. Scott, Featherstone, Allen M.
Format: Article
Language:English
Subjects:
Agricultural economics
Agriculture
Capital asset pricing models
Capital assets
Crop insurance
Disability insurance
Equity
Estimates
Expected returns
Farm economics
Farm income
Farms
Financial risk
Systematic risk
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Summary:Agricultural return risk for each stale in the U.S. Is compared with aggregate agricultural risk. The Capital Asset Pricing Model is used to examine the systematic and the unsystematic nature of risk within individual states and regions. CAPM provides a quantitative estimate (beta) of the sensitivity of an individual state's farm equity returns in relation to the returns of the overall market. Returns and risk vary across states with the greatest expected returns and systematic risk occurring in the Midwest. States with high levels of "systematic" risk will expect higher returns to equity than states with low levels of "systematic" risk. Systematic risk and beta have implications for farm managers, issuers of crop and revenue insurance, and policymakers.
ISSN:0003-116X