Off Farm Investment of Farm Households: A Logit Analysis

Ashok Mishra and Mitchell Morehart

Elsewhere No. (0110), November 2001

Investments selected by individual farmers/farm households will have important implications for the investor's financial well-being, the availability of venture capital for economic development of rural areas, and the competitiveness of financial institutions in rural areas. Furthermore, farmers/managers need to know their investment (both farm and off-farm) portfolios because many of their financial decisions have ramifications for liquidity, retirement, solvency, taxation, and profitability management. Little is known about the farm operator's household and socio-economic characteristics that affect off-farm investments. The objective of this study is to identify factors that affect off-farm investments by farm households and to quantify the factors' relative importance in off-farm investment decisions by farm households.

Keywords: Economic Research Service, US Dept. of Agriculture, agricutural economics, investment, capital, financial decisions, income taxes

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Updated date: November 2001