ENHANCING THE COMPETITIVENESS AND RISK-EFFICIENCY OF FARM ASSETS THROUGH HOLDING FARM/FINANCIAL ASSET AND OFF-FARM INCOME PORTFOLIOS

This study employs a dynamic continuous time model to calculate farm and total farm/financial/off-farm investment portfolios. Data are from the Southwestern Minnesota Farm Business Management Association records. Results are derived for classes of farms sorted by farm profitability. It is shown that this categorization of farm assets has a significant impact on the portfolio results as well as on the degree of competitiveness of the farm asset in relation to financial assets. The impact of off-farm income to portfolio selection is modest but found to differ across farm types.