Rates of Return in the Farm and Nonfarm Sectors: How Do They Compare?

This study examines the return on agricultural assets relative to nonfinancial corporate assets in the general economy using aggregate Bureau of Economic Analysis data. Our results indicate that the rate of return on nonfarm assets dominates the rate of return on agricultural assets. The average rate of return on nonfarm assets is higher than the average rate of return on farm assets, and the variance of the rate of return on nonfarm assets is lower than the variance of the rate of return on farm assets. Furthermore, the rate of return on agricultural assets only exceeds the rate of return in the nonfarm sector in 1992.