ABSTRACT
This chapter evaluates the effects of land holding status on the cropping decisions of two groups of producers: farmland owners and tenants. It uses portfolio theory to evaluate the effects of leasing rates on the cropping decisions of two groups of producers with different land holding status-farmland owners and tenants. Portfolio theory is used to explain the decision environment of each group. The chapter explains the Capital Market Line (CML) concept that is modified to fit the enterprise selection decision facing the agricultural producers. The Capital Market Line (CML) and Cropping Opportunities Line (COL) are identical for landowners, but the COLs for landowners and tenants are quite different. The theoretical results presented in this chapter indicate that one aspect of the attractiveness of any cropping opportunity is reflected in the relationship between its returns and its risk where this relationship is expressed by the COL.
