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THE FARM DIVERSIFICATION DISCOUNT

Ani Katchova

No 20068, 2004 Annual meeting, August 1-4, Denver, CO from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: This paper examines the effect of diversification on farm value by comparing values of diversified farms to a portfolio of comparable specialized farms. Using data from the Agricultural Resource Management Study, this study finds a diversification discount in agriculture similar to the discount found for corporate firms. The results show that diversified crop/livestock farms have a value loss of 5.8% in comparison with specialized crop or livestock farms for 1999-2001. Farms with commodity diversification have a value loss of 9.4% in comparison with commodity specialized farms. The results also show that the value loss due to diversification is larger for leveraged farms.

Keywords: Farm; Management (search for similar items in EconPapers)
Pages: 21
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea04:20068

DOI: 10.22004/ag.econ.20068

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