The Impacts of Off-Farm Income on Farm Efficiency, Scale, and Profitability for Corn Farms

This paper estimates returns to scale and technical efficiency of corn farms following an input distance function approach and compares the relative performance of farm operator households with and without off-farm wages and salaries. We use 1995-2003 USDA data. The input distance function results suggest that off-farm outputs and inputs can be modeled in a multi-activity framework, which materially alter performance measures in the Corn Belt. We find that off-farm income boosts scale and technical efficiency of smaller operations. We also find that the number of hours worked off-farm by the spouse contributes to a higher technical efficiency.Farm Management,

The Economics of Organic Versus Conventional Cow-calf Production

Costs, returns, and profitability of cow-calf farms that are organic or transitioning to organic are compared with those of cow-calf farms that are non-organic. A method of matching samples is used for the comparison. Results suggest higher cost of organic production due to higher unpaid labor, taxes and insurance, and overhead costs.Matching Samples, Profit, Costs, Farm Management, Production Economics,

Cow-Calf Farm Management: Farm survey evidence from 2007

This study describes and compares cow-calf operations and assesses their relative competitiveness, developing performance measures for a sample of U.S. farms. We find that larger operations tend to be significantly more scale and technically efficient than smaller operations. However, we do not find significant differences in net farm returns by size except on medium large operations—showing virtually no net return on farm assets in 2007. While larger operations are clearly more scale and technically efficient and have lower variable costs per cow, off-farm income makes smaller operations competitive as reflected in higher household returns than all size groups--except for very large cow-calf operations.Cow-calf, performance measures, technical efficiency, Farm Management, Production Economics, Research Methods/ Statistical Methods,

U.S. Agriculture, 1960-96 A Multilateral Comparison of Total Factor Productivity

This study provides estimates of the growth and relative levels of agricultural productivity for the 48 contiguous States for the period 1960 to 1996. For the full 1960-96 period, every State exhibits a positive and generally substantial average annual rate of productivity growth. There is considerable variance, however. The wide disparity in growth rates resulted in substantial changes in the ranking order of States by productivity. For each year, we calculate the coefficient of variation of productivity levels. We use these coefficients to show that the range of levels of productivity has narrowed over time, although the pattern of convergence was far from uniform. The fact that in some States, productivity grew faster than others and yet the cross-section dispersion decreased, implies that the States whose productivity grew most rapidly were those with lower initial levels of productivity. This result is consistent with Gerschenkron's notion of the advantage of relative backwardness. The States that were particularly far behind the productivity leaders had the most to gain from the diffusion of technical knowledge and proceeded to grow most rapidly. We also observe a positive relation between capital accumulation and productivity growth, implying embodiment of technology in capital.production accounts, multilateral index numbers, total factor productivity, Productivity Analysis,

OFF-FARM LABOR AND THE STRUCTURE OF U.S. AGRICULTURE: THE CASE OF CORN/SOYBEAN FARMS

While the growing importance of off-farm earnings suggests large benefits accrue to farmers from efforts to expand off-farm income opportunities, survival still depends on greater efficiency. To comprehensively gauge the economic health of farm operator households we interpret off-farm income as an output along with corn, soybeans, livestock, and other crops. To accomplish this task we use two related methodologies. First, using 2000 data, we setup a multiactivity cost function to analyze labor allocation decisions within the farm operator household and also to estimate returns to scale and scope. Second, using 1996-2000 data, we follow an input distance function approach to estimate returns to scale, technical progress, cost economies, and technical efficiency--and compare the relative performance of farm operator households with and without off-farm wages and salaries. Our preliminary results suggest that over our sample period, scale economies are a primary factor driving up farm operator household size and decreasing the competitiveness of small farm operator households in the base farm operator household model where off-farm income is constrained to zero. But small farm operator households appear to achieve efficiency levels more comparable to larger farm operator households when off-farm income is accommodated. The evidence therefore suggests that while short-falls in these productivity components are decreasing the competitiveness of small farm operator households as agricultural structure changes, corn/soybean farm operator households have partially adapted to such pressures by increasing off-farm income and, therefore, achieving economies of scope.Labor and Human Capital,

At What Rate Do Farmers Substitute Manure For Commercial Fertilizers?

Water quality has implications for the health of our ecosystem and the welfare of our population. Agriculture is one of the major contributors of non-point source pollution that contaminates our nation's water supplies. Understanding how farmers substitute manure for commercial fertilizers allows us to better understand the level of nitrogen that enters the soil and can seep into our waterways. In this paper, we explore the factors that help determine farmers' substitution rates between the two types of fertilizers. Location, crop type, and time all could play important roles. We analyze USDA farm level survey data for both crop and livestock farms covering the years 1996 to 2002 to create substitution rate estimates used on corn, soybean, and wheat fields. While the substitution rates we found did not appear to change over the time frame examined, we did find that crop type and location significantly affected the rates that farmers use. Additionally, and perhaps most importantly, the substitution rates we did find did not conform to the "perfect substitution" between N coming from commercial sources and manure used in much of the literature. This means that previous studies could have underestimated the potential level of pollution of our water by our nations' farms.Farm Management,

Land Quality in an International Comparison: It's Importance in Measuring Productivity

The purpose of this paper has been to present quality-adjusted values for land in the United States and nine European countries using price and quantity data for 1990. Disregarding such differences in the quality-adjusted land input would generate biased estimates of the land input and thus of total factor productivity. Land quality adjustments could potentially be enhanced further with additional data on soil characteristics, climate, and other productivity-related characteristics.total factor productivity, hedonic techniques, soil stress, quality-adjusted land, Productivity Analysis,

Genetically Modified Crops, an Input Distance Function Approach

Our initial findings indicate that GM crops do not contribute to the decline of traditional family farms. We make a significant methodological impact by using the within transformation to remove unobserved individual effects and demonstrate that the within transformation results in ML estimates that are identical to OLS estimates.Production Economics, Genetically Modified Crops, Distance Function, Stochastic Frontier Analysis, Production Economics, Research Methods/ Statistical Methods,

Intensive versus Extensive Dairy Production Systems: Dairy States in the Eastern and Midwestern U.S. and Key Pasture Countries the E.U.: Determining the Competitive Edge

In recent years, significant structural and production system changes have been noted in the U.S. and European Union, as well as increased interest in pasture-based dairy systems. Technical efficiency, returns to scale, and farm characteristics are compared by size and production system in traditional U.S. dairy states and E.U. countries.U.S., EU Countries, Dairy Systems, Technical Efficiency, Returns To Scale, Size, Technology, Land Prices, Production Economics, Q12,

Agricultural Productivity in the United States

Increased productivity is a key to a healthy and thriving economy. Consequently, the trend in productivity, economywide, is one of the most closely watched of our common economic performance indicators. Agriculture, in particular, has been a very successful sector of the U.S. economy in terms of productivity growth. The U.S. farm sector has provided an abundance of output while using inputs efficiently. Agricultural productivity growth has been an important source of U.S. economic growth throughout the century, but the years since 1940 have seen an even faster growth in agricultural productivity. The annual average increase in productivity from 1948 to 1994 was 1.94 percent. This reflects an annual growth in output of 1.88 percent per year and an actual decline in agricultural inputs of 0.06 percent per year. This report describes changes in U.S. agricultural productivity, and its output and input components, for 1948-94. The report also discusses factors that have affected productivity trends and provides detailed, technical information about the USDA system for calculating productivity.productivity, efficiency, agricultural production, outputs, inputs, Productivity Analysis,