Agriculture Reference
In-Depth Information
Table 6.8
Ownership and leasing of agricultural assets
British Columbia
Louisiana
Asset
Owned
Leased
Owned
Leased
EOUIPMENT
Tractors
99%
1%
96%
4%
Harvest equipment
99
1
96
4
Cultivator
100
0
97
3
Trucks
99
1
98
2
Sprayer
100
0
98
2
BUILDINGS
House
99%
1%
92%
8%
Shop
97
3
78
22
Barn
99
1
85
15
Storage
98
2
78
22
LAND
Crops
24 (15) a %
76%
30%
70 (22)%
Grass
74
26 (20)
71
29 (21)
Pasture
70
30 (30)
74
26 (23)
Fruit
81
19 (12)
83
17 (17)
Sources: 1992 Louisiana Farmland Leasing and Ownership Survey and 1992 British Columbia Farmland Leasing
and Ownership Survey .
a The number in the parentheses is the percentage of cash rent leases. For example, for cropland in British Columbia
24 percent of the land is leased. This is made up of 15 percent cash rent leases and 9 percent cropshare leases.
approach to contract choice and offers one more example of its shortcomings. In chapter 8
we extend our earlier risk-neutral model to explain this variation.
A Risk Preference Reversal in North American Farming?
The standard risk-sharing approach routinely assumes that landowners are risk neutral and
farmers are risk averse. If the landowner were more risk averse, however, the model predicts
cash rent contracts. 38 Could our empirical findings in tables 6.5 and 6.6 be explained by
simply reversing the risk preferences of some farmers and landowners? There are many
reasons to think the answer is no. Preference reversal does not explain the coefficient
estimates on the FUTURES MARKET or INSTITUTION variables. Nor is preference
reversal consistent with the wealth effects examined in table 6.7. Moreover, two additional
sets of facts grind against this explanation of our findings. First, farmers and landowners in
North America have remarkably similar demographic characteristics, so it is not obvious
how to assign risk preferences. Second, farmers simultaneously hold more than one type
of contract and play both sides of the farmland lease market. In the introduction to the
 
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