Determinants of Financial Performance of Commercial Dairy Farms.

Data from the 1993 Farm Costs and Returns Survey were used in a multi-variate analysis framework to determine factors associated with the financial performance of commercial dairy farm operations. Statistical equivalency tests revealed regional differences in the way extensive indebtedness, size of operation, and labor cost affect net farm incomes. Regional differences were also found in terms of how milk production per cow, per-unit cost of purchased feed, and level of adoption of capital intensive technologies affect per-unit returns. Examination of the variation in the net farm income of commercial dairy farms using the method of coefficients of separate determination identified the size of the operation, regardless of the location of the farm business, as the factor contributing the most to the variability in net farm income. On a per-unit-of-returns basis, factors found most important in explaining the variation in net returns per hundredweight of milk sold were cow's productivity, and per-cow forage production and purchased feed costs.financial performance, net farm income, technological adoption, Lorenz curve, Gini coefficient, Agricultural Finance, Livestock Production/Industries,

RISK MANAGEMENT THROUGH ENTERPRISE DIVERSIFICATION: A FARM-LEVEL ANALYSIS

Enterprise diversification is a self-insuring strategy used by farmers to protect against risk. This paper examines the impact of various farm, operator, and household characteristics on the level of on-farm diversification. Results provide evidence that larger farms are more specialized. Also, farmers who participate in off-farm income and farms located near urban areas are less likely to diversify. Additionally, results also show a significant positive relationship between diversification and farm/crop insurance and sole proprietorships. Finally, there is also evidence that farms that received government payments are more diversified than their counterparts.Farm Management, Risk and Uncertainty,

Wealth Accumulation by Farm Households: Evidence from a National Survey

Wealth affects the economic well-being of the farm households by enabling farm households to secure credit, facilitate intergenerational transfer, and provide for smoothing consumption expenditures in times of income shortfall. This paper examines the factors that are likely to influence wealth accumulation by farm households. Specifically, we use 2001 ARMS data and multivariate regression procedure to estimate two models; one for those farm households whose wealth originates primarily from the farm and another for households with both farm- and nonfarm wealth.Farm Management,

TECHNOLOGY ADOPTION DECISIONS IN DAIRY PRODUCTION AND THE ROLE OF HERD EXPANSION

Technology adoption in dairy production allows for higher milk yield and lower per-unit costs. The importance of herd expansion and other factors to adoption was examined using a multinomial logit model and data from the USDA's 1993 Farm Costs and Returns Survey. Predicted probabilities of adoption were used to simulate the effect of herd expansion on milk production. Results identified age, size, and specialization in dairy production as important in increasing the likelihood of adopting a capital-intense technology. Education and size of operation positively impacted the decision to adopt a management-intense technology. Age, education, credit reserves, size, and increased usage of hired labor positively influenced the decision to adopt a combined capital-and management-intense technology.Livestock Production/Industries, Research and Development/Tech Change/Emerging Technologies,

OFF-FARM WORK PARTICIPATION, OFF-FARM LABOR SUPPLY AND ON-FARM LABOR DEMAND OF U.S. FARM OPERATORS

The paper presents econometric evidence on off-farm work participation, off-farm hours of work, and on-farm hours of work for U.S. farm operators using a national sample of farmers for the USDA's 1991 Farm Costs and Return Survey.Farm Management, Labor and Human Capital, Research Methods/ Statistical Methods,

IMPACTS OF THE ADOPTION OF GENETICALLY ENGINEERED CROPS ON FARM FINANCIAL PERFORMANCE

The rapid adoption of genetically engineered (GE) crops by U.S. farmers suggests that these technologies have been perceived to improve farm financial performance. This study develops and applies an econometric model to data from corn and soybean producers in order to evaluate the financial impacts of the adoption of GE crops. Results indicate that the adoption of GE crops has had a limited impact on financial performance that varies by crop, type of technology, type of farm, and region of the nation. Factors other than the financial impacts appear to be important reasons for the rapid adoption of GE crops.Bt, corn, farm financial performance, genetically engineered crops, herbicide-tolerant, soybeans, technology adoption, Crop Production/Industries, Research and Development/Tech Change/Emerging Technologies,

Welfare Decomposition in the Context of the Life Cycle of Farm Operators: What Does a National Survey Reveal?

This paper examines the role of the life cycle in impacting the distribution of a combined income and wealth measure using data from the 2001 and 2006 Agricultural Resource Management Survey. Such an assessment is made using both graphical representation of the distribution of the well-being measure along with utilization of the social welfare decomposition procedure. Results show a mild yet statistically insignificant improvement in the distribution of the economic measure over the five-year period. Contribution to social welfare is found highest among the cohort where the age of the head of household is between 45 and 54 years. Targeted programs are found to enhance social welfare if they are aimed towards cohorts where the age of the head of household is younger than 35 years or where the age of the head of household is in the 35-to-44 age group, depending on whether the analysis is based on a per-farm household or on a per-capita basis.ARMS, economic well-being, Gini coefficient, Lorenz curve, welfare decomposition, Consumer/Household Economics,

ADOPTION AND ECONOMIC IMPACT OF SITE-SPECIFIC TECHNOLOGIES IN U.S. AGRICULTURE

A Heckman's two-stage method is used in conjunction with data from the 1998 Agricultural Resource Management Study to estimate the likelihood of adopting a variable rate application technology (VRT) and the impact of such adoption on the per-acre costs of fertilizers and lime in cash grain production. Results highlight the importance of operator's level of human capital and attitude toward risk, along with size and location of farm in impacting VRT adoption decisions. Results also indicate no significant cost-savings attributable to VRT adoption.Farm Management, Research and Development/Tech Change/Emerging Technologies,

THE IMPACT OF GOVERNMENT SUBSIDIES ON THE OFF-FARM LABOR SUPPLY OF FARM OPERATORS

In addition to farm work, most farm families have someone working in off-farm employment. The purpose of this paper is to examine if, and how, the change in the nature of government farm programs in the recent past has affected the labor allocation of farm operator households to off-farm employment activities. The ultimate goal of this research is to investigate the potential impacts of decoupled payments on farm output.Labor and Human Capital,

SUCCESSION IN FAMILY FARM BUSINESS: EMPIRICAL EVIDENCE FROM THE U.S. FARM SECTOR

Survival of many family farms is dependent on successful intergenerational transfer. Given the importance of succession in the farm sector, the purpose of this paper is to examine factors that are likely to influence succession decisions on U.S. farms. The paper uses 2001 ARMS data and a multinomial Logit (MNL) regression to estimate family succession, non-family succession, and farm exit decisions of farm households in the U.S. Model choice and specification issues are discussed. Results indicate that operator's education, household wealth, growth in farm size, and farm debt are important factors that determine succession decisions. Additionally, farm specialization is taken into consideration when farm operators make their succession plans.Farm Management,