Sharing Financial Risk through Flexible Farm Lease Agreements

William M. Edwards and Chad Hart

Journal of the ASFMRA, 2013, vol. 2013, 13

Abstract: A simulation model representing a north central U.S. corn and soybean farm was used to estimate the degree of financial risk borne by the tenant and the landlord under 10 different types of flexible cash leases. Probability distributions for yields, prices, and production costs were incorporated. Measures of risk included standard deviation of profits, probability of loss, and 10th percentile value at risk. A profit sharing lease that included rent adjustments for all three variables shifted the most risk from the tenant to the landowner, and reduced the tenant’s probability of incurring an economic loss from 51 percent to 37 percent.

Keywords: Farm Management; Risk and Uncertainty (search for similar items in EconPapers)
Date: 2013
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https://ageconsearch.umn.edu/record/161494/files/386%20Edwards.pdf (application/pdf)

Related works:
Working Paper: Sharing financial risk through flexible farm lease agreements (2015)
Working Paper: Sharing Financial Risk through Flexible Farm Lease Agreements (2013)
Working Paper: Sharing financial risk through flexible farm lease agreements (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:jasfmr:161494

DOI: 10.22004/ag.econ.161494

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