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Abstract

Textbooks in agricultural economics characterize resources used in production agriculture into four categories: land, labor, capital, and entrepreneurial ability. Profit is presented as earned by management. This traditional list of resources is respecified. Management is redefined as a specialized type of labor and two additional resources, information and risk bearing capacity, are added. Profits accrue not to management but to those able to bear the risk inherent in production agriculture. Equity diversification is a means for farmers to provide and manage this resource and, thus, earn economic profits. Producer education and the repeal or amendment of legislation restricting the ability of farmers to diversify their equity investment are needed.

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