Another Look at Returns to Agricultural and Nonagricultural Assets

This paper presents econometric tests of whether mean returns on agricultural assets have been higher or lower than those on comparable‐risk assets in nonagricultural capital markets. The tests are based on alternate maintained hypotheses that the capital asset pricing model (CAPM) or the arbitrage pricing theory (APT) characterize nonagricultural asset returns. Results indicate that mean returns to farmer‐operators have been lower than those to owners of comparable‐risk nonagricultural assets and that mean returns to farmland owners have been higher than those to owners of comparable‐risk nonagricultural assets.