Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Ag firms outperform S&P 500

18.04.2011
While the general economy has underperformed in the past several years, the crop farming sector has been not just stable, but profitable.

A recent University of Illinois report comparing the returns from publicly traded companies from 2007 until the end of the first quarter of 2011 showed an 8.6 percent market value increase from agriculture-related companies and companies in the S&P 500 experienced a decline of 2.7 percent.

"We looked at 21 agriculture-related midwestern companies in five sectors: fertilizer, equipment, seed and genetic companies, crop production companies, and first processors," said U of I graduate student Clay Kramer who created the index with agricultural economist Gary Schnitkey. "The overall goal was to build an AgIndex that measured the change in market value of publicly traded agricultural companies and compare it to the S&P 500, looking at their market values and how they did over time from 2007 up to the first quarter of 2011."

The S&P 500 is an index that tracks the market values of 500 large companies in the United States. All of the agriculture-related companies that were monitored have an interest in agriculture, but the majority also have interests in other entities, such as construction.

Kramer said that over the course of the study, the AgIndex performed much better than the S&P 500.

"In the first year, we saw a 55 percent increase in ag companies compared with 2.2 percent from those in the S&P 500," Schnitkey said. "Year two was the year of the big stock price decline. The S&P 500 declined 35 percent from the beginning of 2008 to the end of 2008 and the ag market fell even further – 48 percent," Schnitkey said.

The full report is available online at www.farmdoc.illinois.edu under the heading Farm Economics: Facts and Opinions.

Kramer and Schnitkey evaluated the markets using a geometric mean, which is very similar to an average.

"For example, if you invested funds in 2007, this would be your average yearly rate of return," explained Schnitkey. "So 8.6 percent for 2007 through 2010 means you would have had an increase of 8.6 percent in value each year up to 2010."

Among the five agriculture sectors, the first processors didn't perform nearly as well when compared with fertilizer and equipment companies, Kramer said.

"From the beginning of 2007 to the end of 2010, there was a 2 percent decrease in the crop protection sector and a 4 percent decrease in the first processor sector," Kramer said. "These sectors did relatively well in the first quarter of 2011, having increases that caused the second quarter 2011 value to exceed the first quarter 2007 value."

According to the report, market values varied across sectors. Fertilizer, equipment, and seed and genetic sectors had large increases in market values.

"These firms supply products to farmers, who have generally had above-average incomes," Schnitkey said. "Farms having above average incomes likely led to higher demand for fertilizer, equipment, and seed and genetic sectors. The sector that had the lowest market value increase from 2007 was the first processor sector. This sector purchases inputs from grain farms, and higher commodity prices may have played a role in lower market values."

Debra Levey Larson | EurekAlert!
Further information:
http://www.illinois.edu

More articles from Agricultural and Forestry Science:

nachricht Plasma-zapping process could yield trans fat-free soybean oil product
02.12.2016 | Purdue University

nachricht New findings about the deformed wing virus, a major factor in honey bee colony mortality
11.11.2016 | Veterinärmedizinische Universität Wien

All articles from Agricultural and Forestry Science >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: How gut bacteria can make us ill

HZI researchers decipher infection mechanisms of Yersinia and immune responses of the host

Yersiniae cause severe intestinal infections. Studies using Yersinia pseudotuberculosis as a model organism aim to elucidate the infection mechanisms of these...

Im Focus: Interfacial Superconductivity: Magnetic and superconducting order revealed simultaneously

Researchers from the University of Hamburg in Germany, in collaboration with colleagues from the University of Aarhus in Denmark, have synthesized a new superconducting material by growing a few layers of an antiferromagnetic transition-metal chalcogenide on a bismuth-based topological insulator, both being non-superconducting materials.

While superconductivity and magnetism are generally believed to be mutually exclusive, surprisingly, in this new material, superconducting correlations...

Im Focus: Studying fundamental particles in materials

Laser-driving of semimetals allows creating novel quasiparticle states within condensed matter systems and switching between different states on ultrafast time scales

Studying properties of fundamental particles in condensed matter systems is a promising approach to quantum field theory. Quasiparticles offer the opportunity...

Im Focus: Designing Architecture with Solar Building Envelopes

Among the general public, solar thermal energy is currently associated with dark blue, rectangular collectors on building roofs. Technologies are needed for aesthetically high quality architecture which offer the architect more room for manoeuvre when it comes to low- and plus-energy buildings. With the “ArKol” project, researchers at Fraunhofer ISE together with partners are currently developing two façade collectors for solar thermal energy generation, which permit a high degree of design flexibility: a strip collector for opaque façade sections and a solar thermal blind for transparent sections. The current state of the two developments will be presented at the BAU 2017 trade fair.

As part of the “ArKol – development of architecturally highly integrated façade collectors with heat pipes” project, Fraunhofer ISE together with its partners...

Im Focus: How to inflate a hardened concrete shell with a weight of 80 t

At TU Wien, an alternative for resource intensive formwork for the construction of concrete domes was developed. It is now used in a test dome for the Austrian Federal Railways Infrastructure (ÖBB Infrastruktur).

Concrete shells are efficient structures, but not very resource efficient. The formwork for the construction of concrete domes alone requires a high amount of...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

12V, 48V, high-voltage – trends in E/E automotive architecture

10.01.2017 | Event News

2nd Conference on Non-Textual Information on 10 and 11 May 2017 in Hannover

09.01.2017 | Event News

Nothing will happen without batteries making it happen!

05.01.2017 | Event News

 
Latest News

A big nano boost for solar cells

18.01.2017 | Power and Electrical Engineering

Glass's off-kilter harmonies

18.01.2017 | Materials Sciences

Toward a 'smart' patch that automatically delivers insulin when needed

18.01.2017 | Life Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>