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Abstract
Agriculture and aquaculture have common
features associated with their biological nature affecting
risk exposure of the businesses. The aim of this paper is
to compare risk exposure in salmon farming and
agricultural enterprises in Norway by using an implicit
error component model to examine the risk structure of
yields, prices and economic returns at the farm level.
Results indicate a higher farm-level year-to-year
variability in yields, prices and economic returns in
salmon farming than in agricultural enterprises. The
variability in livestock enterprises was generally lower
than for crop enterprises. Return on assets was highest
in salmon farming with an average annual return of
9.2%. All of the agricultural farm types exhibited a
negative average return on assets on average. Stochastic
dominance tests of the distribution of economic returns
from aquaculture and agricultural farm types showed
salmon farming to be the most risk efficient alternative
and salmon farming was most attractive from an
investor’s perspective.