Farmland preservation: The role of off-farm income

Abstract

Off-farm income is of increasing importance in U.S. agriculture. As a survival strategy, it can increase the staying power of farm businesses and therefore may affect farmland preservation and urban planning. The paper presents an economic model of off-farm work by farm operators. The purpose is to identify key factors that affect labor-allocation decisions by farmers. The study adapts the traditional economic model to include non-monetary benefits as a variable influencing multiple job-holding. Using data from the U.S. Department of Agriculture's 1981 Family Farm Survey, regression analysis was employed to analyze 247 farm operators who reported work off the farm. The off-farm work supply of operators was estimated as a function of the off-farm wage rate, fixed farm characteristics, a measure of non-monetary benefits and the farm and family life cycle characteristics. The empirical evidence supports the view that farmers consider both monetary and non-monetary (lifestyle) benefits important in their decision about where to allocate labor. For policy makers interested in preserving farmland near cities, the results of the study suggest that urban and rural development policies which do not erode the non-monetary benefits of farming (independent lifestyle, healthy environment) will be more successful in increasing stability of land in farming.