Factors Affecting Variability in Farm and Off-farm Income

Kenneth Poon and Alfons Weersink

No 102064, Working Papers from Structure and Performance of Agriculture and Agri-products Industry (SPAA)

Abstract: The purpose of this paper is to examine the factors affecting the relative variability in farm and off-farm income for Canadian farm operators. Previous attempts have been limited by the lack of available data combining both farm and off-farm income levels for farm operations over time. Statistic Canada’s Farm Micro-Longtidinal Dataset of 17,000 farm operators from 2001 to 2006 allowed such an analysis. The coefficient of variation (CV) in farm income is significantly greater than that for off-farm income but both measures are inversely related to the permanence of the income source to the operation. The greater the reliance on farm income and the greater the labour demand within the farm, the lower (greater) the relative variability in farm (off-farm) income. Larger commercial operations tend to experience larger farm income volatility either because they are less risk averse and/or have the ability to manage more risk. Diversification and off-farm employment appear to be substitute for risk management strategies for commercial operations. Pension and lifestyle farms have lower coefficient of variation for both farm and off-farm income compared to business-focused farms since they are possibly more risk averse and benefit from a permanent stream of off-farm revenue. Government payments have mixed effects on the relative variability of both income sources, which may be due the lag between the time of the income reduction and the time at which the aid is received.

Keywords: Agricultural; and; Food; Policy (search for similar items in EconPapers)
Pages: 35
Date: 2011-03
New Economics Papers: this item is included in nep-agr
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Citations: View citations in EconPapers (27)

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Related works:
Journal Article: Factors affecting variability in farm and off‐farm income (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:spaawp:102064

DOI: 10.22004/ag.econ.102064

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