Two-limit Tobit Model Research Articles

Determinants of multiple maize technology package adoption in Ethiopia: evidence from the Sidama region

The adoption of improved agricultural technology packages is vital in Ethiopia, as the expansion of cultivable land appears nearly exhausted and population size has skyrocketed. However, the country has shown a low adoption rate. Thus, this study aimed to explore the factors that hinder or facilitate the adoption of multiple maize technology packages and intensity of adoption in the northern Sidama zone of Ethiopia. A multistage sampling procedure was applied to gather cross-sectional data from 424 farm households owning 545 maize plots. A multivariate probit and two-limit Tobit models were applied to address the study objectives. The conditional probability results confirmed that maize technology packages are complementary (positive relationship). This infers that agriculture-focused policies that influence the adoption of a single component of technology packages can have a reinforcing advantage over the adoption of other technologies. Furthermore, the results from the models showed that farmers with greater experience, family size, plot size, livestock and oxen ownership, number of maize plots owned, off-farm income, access to credit, extension services and membership in institutions are more likely to adopt at least one of the improved technology packages and achieved a better status of intensity of adoption. Therefore, it is crucial to reinforce and deliver quality extension services, provide credit access, motivate youth to be involved in farming activities, inspire membership and ease the system to access inputs and technologies for broader adoption of technology packages.

Factors Affecting Technical Efficiency of Coffee Producers: The Case Dale Woreda, Sidama Region, Ethiopia

Coffee is the major source of income for smallholder farmers and is a leading export crop for Ethiopia. Even though a great proportion of coffee production comes from smallholder farmers with farm sizes below two hectares, productivity in these farms remained very low. To identify the causes of low productivity this study identified the technical efficiency level of smallholder coffee farmers and the factors that influence technical efficiency in coffee production in Dale Woreda, Sidama Region, Ethiopia using the stochastic frontier approach. In addition, this study attempts to determine whether the agricultural and some of the socio-economic characteristics of farmers can influence the efficiency of their technical efficiency coffee production. By exploiting the information that was gathered in a survey of 150 farmers selected randomly from three kebeles using stratified random sampling in the woreda, these farmers' technical efficiency was estimated using a trans-long-type stochastic frontier model and two-limit Tobit model. The mean technical efficiency of the study area is 65.43%. The results suggest that, factors like the land cover, labor in hours, compost used as well as their cross product and the interaction effects of labor with sufficient compost used, labor with proper capital-labor force, and minimum cost for agricultural equipment and composite with proper capital significant determinants of coffee technical efficiency in the area. Furthermore, variables like educational status, age of the coffee tree, membership of cooperative associations, size of livestock holding, presence of additional off-farm incomes, and age of household head are significant predictors of the technical efficiency of farmers in the study area. Thus, by improving their education, improving the frequency of extension service, increasing livestock holdings, improving membership in cooperative associations, and replacing the aged coffee tree, someone can improve his/her technical efficiency directly and coffee production indirectly.

Production efficiency of wheat farmers in the Arsi Zone, Oromia Region of Ethiopia

Wheat is a cereal crop that contributes to food security; thus, Ethiopia must boost the production efficiency of wheat to meet the sustainable development goal of eradicating hunger and poverty. Consequently, a significant revolution is occurring in the Ethiopian wheat industry to improve production and productivity. Therefore, it is critical to understand the current level of wheat farmers’ efficiency, as its production is highly influenced by existing agricultural technologies and climate change, which makes it dynamic. Accordingly, this study employed the parametric Cobb–Douglas stochastic frontier and two-limit Tobit models to evaluate wheat farmers’ efficiency and determine their drivers in Ethiopia’s largest wheat-producing area, the Arsi Zone. A multistage sampling strategy was applied to obtain a representative sample of 422 wheat farmers. The model’s output suggested that the average technical, allocative, and economic efficiency scores were 80.8%, 88.1%, and 71.3%, respectively. It is confirmed that wheat farmers’ efficiencies can increase with household head age, education level, livestock ownership, contact with extension agents, wheat mechanization, and involvement in non/off-farm activities but decrease with household distance from the main market and total land holdings. To realize the potential gains from wheat cultivation in Ethiopia, the government needs to develop policies and strategies that enhance farmers’ education, livestock production, and extension contact, facilitate infrastructure, market development, and wheat mechanization, and promote non/off-farm activities.

Food Miles and Regional Logos: Investigating Consumer Preferences in the Midwestern United States

Regional food marketing initiatives in the United States include state-sponsored marketing programs, promotional efforts made by non-profit organizations, and retail-level supermarket campaigns. Some employ food miles, while others emphasize state boundaries or regions. Given that U.S. consumers are faced with these options, the objectives of this study are to (1) determine whether consumers have a clear preference ranking between three regional marketing logos currently seen in the marketplace, (2) estimate whether consumers are willing to pay a price premium for food mileage information, and if so, what mileage cutoffs are preferred, and (3) uncover whether displaying food mileage, regional marketing logos, or dual-displaying both sets of information is most preferred by consumers. To address these objectives, an artefactual field experiment featuring a series of non-hypothetical, random nth-priced auctions is conducted with 98 community participants in Wisconsin. The experimental auctions feature cheese displaying a regional marketing logo, a food mileage cutoff, or both simultaneously. A random-effects two-limit tobit model is used to fit the elicited bid data. Our results suggest regional logos referencing smaller geographic areas are preferred over state logos by U.S. consumers who are willing to pay a price premium. Consumers are not willing to pay a price premium for food mileage information unless it is within 50 miles. Our results also suggest larger distances do not meet consumers’ definition of local. Therefore, to appeal to consumers, federal and state agencies, retailers, and producers should consider marketing efforts targeting smaller regional areas. Such efforts could help shorten the food supply chain while providing consumers with an opportunity to make more sustainable food choices.

Factors Influencing Adoption of System of Rice Intensification among Smallholder Farmers in Mvomero District, Tanzania

Adoption of the System of Rice Intensification among Smallholder Farmers (SRI) is important due to its extraordinary potential in production and productivity but there are factors which influence its adoption in different places including Tanzania. This research was conducted in Mvomero District, Morogoro, Tanzania to determine the extent of adoption of innovations in paddy production and analyzed factors influencing this adoption. A cross-sectional research design was adopted and 299 respondents were sampled using simple random technique while the Key Informants were sampled purposively. Data were collected using questionnaire and in-depth interviews. Qualitative data were analyzed using content analysis while quantitative data based on the factors influencing adoption of SRI were analyzed using a Two-limit Tobit model. It was found that Marital status, land ownership, availability of paddy markets, knowledge, age and education level had significant influence on adoption of SRI (p0.05). It is concluded farmers’ knowledge is an important variable in adoption of SRI and hence enhancement of paddy production and productivity. Extension workers are advised to deliver regular extension programmes to farmers to enable them adopt new paddy innovations including SRI. In this case, farmers will be well-informed about the introduced innovations to their setting.

The public perspective on renewable energy versus nuclear power for carbon neutrality in South Korea.

South Korea has legislated "2050 carbon neutrality" in 2021 and is currently implementing it, and debate is brewing over which to focus on as the main means of achieving it in the power generation sector: renewable energy (RE) or nuclear power (NP). This article aims to collect and analyze data on the public preference for RE versus NP. In a national survey of 1000 people, respondents were first asked which was preferred, RE or NP, and then asked to indicate the preference intensity along a 5-point scale. Of all the respondents, 60.3% preferred RE and 27.7% preferred NP. The preference for the former was about 2.2 times more than that for the latter. However, the intensity of the preference for NP was 1.3 times more than that for RE. Both the two-limit Tobit model and ordered probit model have been applied to analyzing the factors influencing the preference. The effects of some variables on the preference for RE over NP are explained, and implications from this are discussed. The findings can be used as a reference to determine the main means of implementation of carbon neutrality or to increase the public acceptance of the specified means.

Irrigated Onion Production Efficiency in Humbo District, Southern Ethiopia

The study sought to establish the level of technical, allocative, and economic efficiencies in irrigated onion production in southern Ethiopia, as well as to identify the sources of inefficiencies. The cross-sectional data were obtained from a total of 165 random onion farmers selected from the Humbo area. The parametric stochastic frontier model was used to estimate technical, allocative, and economic efficiency levels, whilst the two-limit Tobit model was utilized to identify determinants of inefficiencies. The data acquired suited the Cobb-Douglas (CD) production function, with land, labor, fertilizer, and chemicals as input factors that had a positive and significant influence on irrigated onion production. The sampled onion farmers’ technical, allocative, and economic efficiencies were determined to be 77, 88, and 68%, respectively. The model results indicated that the age of the farmers, years of education, and total farm financial gain were identified as important sources of irrigated onion production inefficiencies in the research area. The mean technical efficiency levels indicate that irrigated onion producer farmers in the research area may raise their output by 23% with present inputs and technology. Alternatively, farmers will reduce their average production price by 12% while maintaining the current level of output. It is based on this that there is room to improve the efficiency of irrigated onion production. Therefore, the government’s policies and actions should focus on timely and quality agricultural input supply for onion farmers and backing them through availing of formal and informal educational services.

Explaining Farmers’ Income via Market Orientation and Participation: Evidence from KwaZulu-Natal (South Africa)

In many sub-Saharan African nations, commercializing smallholder agriculture has recently been seen as a strategy for attaining equitable growth and eliminating poverty in a sustainable manner. Despite the distinction made between market participation and market orientation, their respective impacts on farm income have not been given enough attention in the literature. In this paper, their respective determinants are analysed and each of them is linked to smallholder farmers’ income. The survey was conducted in and around four irrigation schemes in KwaZulu-Natal. Using a sample of 332 farmers, the study estimated the output participation index/market orientation index and employed the two-limit Tobit and OLS regression models. The findings show that socioeconomic, institutional and production factors influence market orientation and participation differently. In addition, market participation is more important in explaining farmers’ income compared to market orientation. Moreover, farmers had a higher rate of market participation index (83%) while their market orientation index was very low (38%). Market orientation is, therefore, not a pre-condition for market participation. In smallholder agriculture, market participation is a function, mainly, of marketed surplus. These realities are valid for smallholder agriculture and in sharp contrast with commercial agriculture. Engaging smallholder farmers more in market participation rather than market orientation would be a better strategy to improve their access to markets and eventually enhance their income. Market orientation will then become the unintended outcome of continuous engagement of farmers with the market.

Loan Repayment Performance of Smallholder Farmers: The Case of Oromia Credit and Savings Share Company in Tole District of Southwest Shoa Zone, Oromia Regional State, Ethiopia

The aims this study is to identify those factors that affect loan repayment performances of smallholder farmer in Tole district of Southwest Shoa zone, Oromia regional state of Ethiopia. In order to address the stated objective data were collected through survey of 174 sample borrower farmer. To identify and analysis factors affecting loan repayment performances and intensity of loan recovery in the district two-limit Tobit model were used. From the total sample borrower farmer, 9.2%, 20.7% and 70.1% were complete defaulters, partial defaulters and non-defaulters respectively. A total of 17 explanatory variables were included in the analysis from which family expenditure and repayment period suitability affect loan repayment performance and intensity of loan recovery of the sample borrower farmer significantly and negatively. On the other hand, size of land holding, income from on-farm activities, income from off-farm activities, household saving and frequency of extension contact had a significantly and positively affect loan repayment performance and intensity of loan recovery of sampled smallholder farmer in the study area. Therefore, each concerned body aimed to improve loan repayment performances of smallholder farmer in the study area could be successful if they consider these factors. Keywords: Ethiopia, Loan, Non-defaulter, Tobit DOI: 10.7176/RHSS/12-13-04 Publication date: July 31 st 2022

Intensity of adoption and welfare impacts of drought-tolerant rice varieties cultivation in Bangladesh

Rice production in Bangladesh is vulnerable to climate-related risk such as drought, which contributes to food insecurity. Adoption of drought-tolerant rice varieties can play an important role in increasing productivity, food grain supply, and income. However, to the best of our knowledge, no studies have measured the welfare impacts of drought-tolerant rice varieties in the South Asian and Bangladeshi context. Therefore, this study identifies the factors that influence the intensity of adoption and welfare impacts of drought-tolerant rice varieties in Bangladesh. To accomplish these objectives, 300 rice growers from three drought-prone districts of Bangladesh were surveyed. To analyze the impacts, the entire sample was divided into three groups depending on their share of land under drought-tolerant rice variety cultivation: full adopters, partial adopters, and non-adopters. The descriptive statistics, two-limit Tobit model and multivalued treatment effect models were used to analyze the data. According to the findings, training as well as technology-related factors play a major role in boosting the intensity of adoption. Full adopters of drought-tolerant varieties receive 1222–1473 kg higher yield per hectare compared to non-adopters. Based on several treatment effect models, the impact on income ranges from 3.46% to 4.22%. When compared to non-adopters, full adopters can consume 1.02–1.29 months more rice from their own production in a year. Shows about climate change and other relevant topics should be broadcast on the television on a regular basis to raise awareness. Modifying the extension method with modern communication technologies will aid in widespread adoption of new technologies. Drought-tolerant rice varieties can help to mitigate the harmful effects of drought and alleviate poverty in drought-prone areas.

Cassava Production Efficiency in Southern Ethiopia: The Parametric Model Analysis

Due to capital constraints and land scarcity in developing countries, introducing new technology to boost productivity is difficult. As a result, working to improve cassava production efficiency is the best option available. Cassava is increasingly being used as a food source as well as an industrial raw material in the production of economic goods. This study estimates cassava production efficiency and investigates the causes of inefficiency in southern Ethiopia. Cross-sectional data from 158 households were collected using a systematic questionnaire. The Cobb-Douglas (CDs) stochastic frontier production model was used to calculate production efficiency levels. The computed mean result showed technical efficiency (TE), allocative efficiency (AE), and economic efficiency (EE) levels of 74, 90, and 66%, respectively. This demonstrated that existing farm resources could increase average production efficiency by 26, 10, and 34%, respectively. The study found that land size, urea fertilizer application, and cassava planting cut all had a positive and significant effect on cassava production. It was discovered that TE was more important than AE as a source of benefit for EE. Inefficiency effects modeled using the two-limit Tobit model revealed that household head age, level of education, cassava variety, extension contact, rural credit, off-farm activities involvement to generate income, and farm size were the most important factors for improving TE, AE, and EE efficiencies. As a result, policymakers in government should consider these factors when addressing inefficiencies in cassava production. It is especially important to provide appropriate agricultural knowledge through short-term training, to provide farmers with access to formal education, to access improved cassava varieties, and to support agricultural extension services.

The Implication of Child Labour on Educational Achievement: A Case Study in Assosa Town, Benishangul-Gumuz Regional State, Ethiopia

This study aimed to identify the implications of child labour on child educational achievement. Cross sectional data randomly collected from 384 sample child labourers in Assosa town, were utilized in this study. Two- limits tobit estimator was employed for estimating the determinants of child educational achievement. The empirical result reveals that there is association between child labour and educational achivement. Thus, strengthening school based financial support and creating awareness are of paramount importance to fight child labour exploitation. Curbing the problem of child labour and improving academic achievement also requires reducing poverty. Keywords: Child labour; Children’s educational achievement; Two-limit tobit model DOI: 10.7176/JESD/12-13-05 Publication date: July 31 st 2021

Seafood consumption patterns and affecting factors in urban China: A field survey from six cities

Chinese seafood market has grown rapidly. China is a country covering a vast territory with diversified natural resources, the lifestyle and diet of residents in different regions are varied. This paper identifies differences in seafood consumption patterns across urban China, reasons behind consumer behaviors. Through face-to-face interviews, the authors used a multistage stratified cluster sampling procedure to survey 1201 households from six provinces or municipalities in China: Beijing, Shanghai, Xian, Nanchang, Shenyang, and Yinchuan. Ordered probit model and two-limit tobit model were estimated to investigate the determinants of household seafood consumption frequency and seafood expenditure share. The findings are that choices of seafood types are associated with regional economies. Considerable population in northeastern and western China consumes more fish than the population of the other regions. People living in economically developed regions, such as Beijing and Shanghai, consume more shrimp. Education and income also affect household seafood consumption frequency and expenditure share in total food cost. Geographic locations have strong influence on seafood consumption. Seafood is of great importance to coastal and lakeside areas, but it is less appealing to northeastern and western residents. People living in Shanghai and Nanchang eat seafood more frequently, have higher seafood expenditure share than people living in Xian; Health motive is a significant predictor of seafood consumption. Health-oriented people eat seafood more frequently than they eat terrestrial animals (such as bovine, ovine, pig, and poultry). These findings are useful for global seafood producers, marketers, and policy makers to improve their product perception, marketing strategies and promotion policies.

The Implication of Child Labour on Educational Achievement: A Case Study in Assosa Town, Benishangul-Gumuz Regional State, Ethiopia

This study aimed to identify the implications of child labour on child educational achievement. Cross sectional data randomly collected from 384 sample child labourers in Assosa town, were utilized in this study. Two- limits tobit estimator was employed for estimating the determinants of child educational achievement. The empirical result reveals that there is association between child labour and educational achivement. Thus, strengthening school based financial support and creating awareness are of paramount importance to fight child labour exploitation. Curbing the problem of child labour and improving academic achievement also requires reducing poverty. Keywords : Child labour; Children’s educational achievement; Two-limit tobit model DOI: 10.7176/RHSS/11-3-04 Publication date: February 28 th 2021

Bilateral investment treaties and backward linkages in Sub-Saharan Africa

This article is an original contribution to the understanding of the impact of bilateral investment treaties in developing countries. By exploiting a unique sample of foreign affiliates in nineteen Sub-Saharan Africa countries, we show that the presence of a bilateral investment treaty between FDI origin and destination countries is positively related to the propensity of foreign investors to generate linkages to local suppliers. In addition, we find evidence that such relationship is stronger for countries with lower institutional quality and that bilateral investment treaties become more effective the larger the difference in levels of development between source and host. The estimation technique we use is a two-limit Tobit model. Our results are of high importance from a political point of view. They support the argument that bilateral investment treaties can help countries with low levels of governance quality, as several Sub-Saharan African countries, to credibly remedy local institutional inefficiencies and, therefore, the participation in an international treaty make the opportunities for local sourcing more likely. These potential gains can justify the decision of policymakers in developing countries to sign BITs, despite such agreements impinging on their national sovereignty.

Drivers of Farm-level Adoption of Crop Extension Packages in Ethiopia

Smallholder farmers’ adoption of agricultural technologies varies to a great degree with respect to spatial diversity, household related characteristics, access to infrastructure and institutional design. This cross-sectional study was conducted in order to understand the factors affecting the uptake agricultural technologies in the highlands of Ethiopia. Analysis was conducted on data collected in 2014 from a survey of 2,880 households in four major regions of the country covering 30 districts. Econometric method (two-limit Tobit model) was used to analyse determinants of farm-level adoption of crop technology packages promoted by the national agricultural extension service. Findings reveal that 71%, 66%, 60%, 52%, 46% and 29% of the sample households adopted recommended technology packages for potato, wheat, maize, tef, barley, and sorghum respectively. Results demonstrate that agro-ecology and spatial variability, distance from homestead to farm plots, slope index of the farm, access to extension services, access to credit, lagged gross annual income and membership to a cooperatives were all significant factors influencing technology adoption. The study shows there is significant variation in technology adoption between model farmers and non-model farmers. However, the productivity difference is limited to few crops. The findings suggest that investment in infrastructure, promoting access to institutional services and access to credit are instrumental to technology adoption by smallholders. The extension strategy should therefore promote inclusive strategy in which both model and non-model farmers have equal access to technology supply and extension services.

The link between production efficiency and opportunity cost of protecting environment in TR83 region, Turkey.

Many nations have tended to transform their traditional growth paradigm to green growth policy paradigm to ensure environmentally sustainable development. Governments, therefore, have developed and implemented environmental protection programs to ensure environmentally sustainable development. For accelerating the transformation to green production techniques and technologies, the study aims (i) to calculate the opportunity cost of protecting environment, (ii) to estimate the production efficiency of farms, and (iii) to determine the impact of opportunity cost of protecting environment on the production efficiency in TR83 region in Turkey. Farm-level research data have been collected from totally 361 farms (334 farms participated in the environmental protection programs (EFALP) and 27 conventional farms) by using a well-structured questionnaire during the production year of 2016-2017. Minimization of total absolute deviation (MOTAD) programming model as a linearized version of QP was used to elicit the farm plans under both condition of protecting environmental and conventional farming condition. When estimating the technical, allocative, and economic efficiencies, the net farm revenue under prevailing conditions, potential net farm revenue, and optimum farm revenue were used. The net revenue difference between EFALP farm and conventional farm was attributed to the opportunity cost of protecting the environment. The impact of the opportunity cost of protecting the environment on production efficiency was explored by using two-limit Tobit model. Research results show that the opportunity cost of environmental protection is 3060 TRY per hectare and varied spatially in the research area. Government environmental support has not compensated the farmers' revenue sacrifice completely. The technical efficiency scores of EFALP farms and conventional farms are 0.77 and 0.75, while that of allocative efficiency are 0.83 and 0.86, respectively. The economic efficiency scores of the EFALP farms and conventional farms are 0.62 and 0.63, respectively. Research results further indicate that the opportunity cost of protecting the environment can be said to have a negative impact on the economic efficiency. The variables of labor and farmland have been negatively affected the economic efficiency, while the effects of operating capital, age of operators, and family size seem positive. The study suggests creating regulatory framework providing opportunity to adjust government environmental support spatially based on the farm-level opportunity cost of protecting environment. Government practices should be developed by policymakers to supervise and control the farms participated in the environmental protection programs. Eliminating the conventional decision-making approach and replacing with environmental trade-off analysis-based decision-making techniques, involving stakeholders during the designing environmental policy, and sharing outputs of environmental trade-off analysis may increase the success of the environmental policy and programs. In addition, bringing away the goal mismatch of scientist and users by establishing bridge in between knowledge and action may increase the effectiveness of environmental protection programs.

Assessment of Loan Repayment Performance of Smallholder Farmers: The Case of Gubalafto District, North Wollo Zone, Amhara National Regional State, Ethiopia

The main objective of this study was to assess loan repayment performance of smallholder farmers in Gubalafto district of North Wollo Zone. A two-stage sampling technique was employed to select a total of 140 sample borrowers. The two-limit Tobit model and descriptive statistics were used to analyze the data collected from the sample respondents. The descriptive statistics result indicates that about 27 percent of the sampled households are low performer and the remaining 73 percent were high performers of loan. In addition, the descriptive statistics results revealed that there were significant mean differences between the low and high repayment performance group in the study district with respect to age of the borrowers, sex, distance from credit source, education level, total land size, Loan amount received, livestock holding and purpose of borrowing. The maximum likelihood estimate of the two Limit Tobit model results indicate that 13 variables were considered in the econometric model out of which, 7 variables were found to significantly influence loan repayment rate among the farm households at less than 5 percent level of significance. Age of borrowers, Educational level of borrowers, land size, total livestock holding and Off-farm income positively and significantly influenced the intensity of loan repayment while, Distance to credit source and Loan amount received negatively influenced the loan repayment rate of small holder farmers in the study area. Keywords: Loan repayment performance, Tobit model, Gubalafto District DOI: 10.7176/JBAH/10-7-03 Publication date: April 30 th 2020

Analysis of Income Diversification and Livelihood Strategies Among Pastoral and Agro-pastoral Households’ in Southern Ethiopia

In pastoral and agro-pastoral areas of Ethiopia, apart from farming engaging on non-farm and/or off-farm income earning activities or diversifying income-earning means lie at the heart of livelihood strategies among pastoral and agro-pastoral household in southern Ethiopia. This study analyses determinant of the level of income diversification and livelihood strategies of pastoral and agro-pastoral households’ in southern Ethiopia. In order to select representative sample a combination of both stratification and random sampling techniques were used and selected 196 household heads. To analyze the data simple descriptive statistics, Multivariate Probit, and Two-limit Tobit models were employed. The result of model reveals that factors influencing the use of livelihood strategies are age, sex, family size, educational level, farm size, market distance to the main market, livestock holding size, cooperative membership, use of credit and access to transport were as sex, family size, educational level, livestock holding size, crop failure, a distance of nearest main market income from farm and share of non & off-farm income influenced income diversification. The government should emphasize strengthening the agricultural production system with due attention to identified factors influencing both diversification of income and livelihood strategies and thereby enhancing the well-being of pastoral and agro-pastoral households of the area.

The agency cost of ownership and governance adaptations in farm producer organizations

Purpose Many farm producer organizations pursue growth and complexity in response to price volatility, industry consolidation and other external developments. Consequently, as ownership is dispersed and control is delegated, members may face increasing agency cost. In spite of the potential to impact performance and even survival, empirical attention to agency problems in farm producer organizations is limited. The purpose of this paper is to address the gap in the literature with an empirical study. Design/methodology/approach With survey responses from 365 farm producer organizations in the USA, the author uses a two-limit tobit model to estimate the relationships of six ownership and governance characteristics (i.e. board size, management size, director independence, manager independence, CEO independence and non-member ownership) to agency cost, which is proxied by the operating expense ratio. Findings While controlling for heterogeneity in scale and technology, the author finds positive relationships of board size, management size and CEO independence to agency cost. The novel result illustrates there is a significant cost to the adoption of non-traditional ownership and governance characteristics by farm producer organizations. Practical implications The presence of agency cost serves as motivation to farm producer organizations to implement new or adapt old agency mechanisms. One recommendation is to reconsider the payment structure of non-member CEOs. There may not be enough incentive to inspire an upstream bias, which is perhaps possible by linking CEO performance to price, patronage and member-oriented performance measurements. Originality/value Agency cost is rarely studied in relation to farm producer organizations. Recent contributions in the empirical literature lacked an explicit connection of ownership and governance characteristics to agency cost.