A COMPARATIVE STUDY OF VARIABILITY IN AGRICULTURAL ENTERPRISES AND FISH FARMING

Agri- 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. Panel data originated from the Norwegian Farm Accountancy Survey and the Norwegian Directorate of Fisheries. Results indicate a higher farm-level year-to-year variability in yields, prices and economic returns in salmon farming than in agricultural enterprises. Return on assets was highest in salmon farming with an average return of 9.2%. All of the agricultural farm types exhibited a negative average return on assets. Stochastic dominance tests of the distribution of economic returns from fish farming and agricultural enterprises showed salmon farming to the most economic viable alternative