Value Of Farm Production Research Articles

Risk-adjusted farm returns and farm size

PurposeThe average U.S. farm size has risen dramatically over the last three decades. Motives for this trend are the subject of a large body of literature. This study incorporates farm size risk and return analysis into this research stream. In this paper, cross-sectional and temporal relations between farm size and returns are examined and characterized.Design/methodology/approachRelying on farm level panel data from Kansas Farm Management Association (KFMA) for 140 farms from 1996 to 2018, this article examines the relationship between farm size and returns and investigates whether farm size is related to risk. Two measures of farm returns are used: excess return on equity and risk-adjusted return on equity. Value of farm production and total farm acres are used as measures of farm size.FindingsFindings suggest a significant and positive relationship between farm size and excess return on equity as well as farm size and risk-adjusted return on equity. However, this return premium associated with farm size is not associated with additional risk. Stated differently, farm size can be viewed as a farm characteristic that is associated with higher return without additional risk.Practical implicationsThese findings provide further support for ongoing farm consolidation.Originality/valueThe results suggest the trend towards consolidation in production agriculture is likely to continue. Larger farms bear less risk.

Land tenure and profitability among young farmers and ranchers

PurposeThe purpose of this article is to investigate how land tenure correlates with measures of profitability among young farmers and ranchers in the United States. The authors hypothesize that young producers who own a larger proportion of their operation face different incentives between short- and long-run returns than young producers who primarily rent their land. The authors analyze whether these differing incentives result in observable differences in various measures of profitability.Design/methodology/approachThe authors use state-level data from the Agricultural Resource Management Survey (ARMS) from 2003 to 2018 to estimate fixed-effects panel models correlating land tenure with the value of farm production, expenditures on repairs and maintenance, net farm income, total operator household income from farming, rate of return on assets (ROA) and rate of return on equity (ROE).FindingsThe authors find different correlations for crop farms and livestock farms, as well as different correlations for farms with the lowest and highest gross sales. For crop farms, renting land is associated with higher production, higher income, higher ROA and higher ROE. For livestock farms, renting land is associated with lower production.Originality/valueThis study rigorously investigates the role of land tenure specifically among young farmers and ranchers in the United States. By better understanding how land ownership affects profitability among beginning farmers and ranchers, policymakers will be able to better target public resources to support the next generation of producers.

English

English

Farm Production Growth in the Upper and Middle Parts of the Yellow River Basin, China, During 1980–1999

The impact of inputs on farm production growth was evaluated by analyzing the economic data of the upper and middle parts of the Yellow River basin, China for the period of 1980–1999. Descriptive statistics were employed to characterize the temporal trends and spatial patterns in farm production and five pertinent inputs of cultivated cropland, irrigation ratio, agricultural labor, machinery power and chemical fertilizer. Stochastic frontier production function was applied to quantify the dependence of the farm production on these inputs. The growth of farm production was decomposed to reflect the contributions by input growths and change in total factor productivity. The change in total factor productivity was further decomposed into the changes in technology and in technical efficiency. The gross value of farm production in the region of study increased by 1.6 fold during 1980–1999. Among the five selected farm inputs, machinery power and chemical fertilizer increased by 1.8 and 2.8 fold, respectively. The increases in cultivated cropland, irrigated cropland, and agricultural labor were all less than 0.16 fold. The growth in the farm production was primarily contributed by the increase in the total factor productivity during 1980–1985, and by input growths after 1985. More than 80% of the contributions by input growths were attributed to the increased application of fertilizer and machinery. In the change of total factor productivity, the technology change dominated over the technical efficiency change in the study period except in the period of 1985–1990, implying that institution and investment played important roles in farm production growth. There was a decreasing trend in the technical efficiency in the region of study, indicating a potential to increase farm production by improving the technical efficiency in farm activities. Given the limited natural resources in the basin, the results of this study suggested that, for a sustainable growth of farm production in the area, efforts should be directed to technology progress and improvement in technical efficiency in the use of available resources.

Impact of resources and technology on farm production in northwestern China

Analyses were performed to evaluate the impact of resources and technological inputs on farm production in northwestern China, including five provincial districts of Shaanxi, Gansu, Ningxia, Qinghai, and Xinjiang. The gross value of farm production using 1978 constant prices was chosen to be the dependent variable in data analysis. Input variables included the irrigation ratio, farm labour, fertilizer application, and farm machinery. Multivariate statistical analysis (correlation and regression) was used to characterize the relationships between the gross value of farm production and various input variables. The gross value of farm production in the region increased fivefold during the study period, and was strongly associated with resource use and technological inputs. The gross value of farm production was significantly correlated with the irrigation ratio in Shaanxi, Gansu, and Ningxia, where the irrigation ratio was relatively low compared with the national averages. The increase in irrigation ratio in these provincial districts explained 9–19% of the growth in farm output from 1978 to 1998. Technological inputs of chemical fertilizer and farm machinery were significantly associated with farming output in all provincial districts. During the study period, the application of technological inputs increased two to eightfold, and contributed about 45% in the growth of farming output in the region. Farm production was also found to be significantly correlated with labour input. Results of this study indicated that water use efficiency and irrigation management need to be improved for future agricultural development, and further advances in farm mechanization and technology application are key for increasing farm production with limited water resources in this semi-arid area.

Economic risk and the structural characteristics of farm businesses

This study uses farm‐level data from the Illinois Farm Business Farm Management Association to determine whether the variability of net farm income is significantly influenced by farm size, financial structure, and other structural characteristics of farm businesses. The econometric results indicate that under a cross‐sectional model the relative variability of real net farm income is not significantly influenced by farm size, measured either by acreage or value of farm production. However, under a time‐series/cross‐section model, periodic variations in farm size, along with differences in the relative crop price received, crop yield, degree of enterprise diversification, and geographic location, can significantly influence changes in farm income variability.

An Interpretive View of an Institutional Process: Measuring Effectiveness and Changeability of the Cooperative Extension Service

variables may be impossible. In the present context, it was assumed that the rate of change in gross value of farm products sold and outputinput ratios in agriculture were dependent variables reflecting the effectiveness of extension; and the total extension budget per farm, the number of extension agents per farm, and the budget per agent were independent. Relationships between variables were first tested using nine pairs of states representing a wide range of values of farm products sold and a wide geographic dispersion.2 Intrapair comparisons from the 1935-40 period showed that high extension inputs yielded higher ratios of change in gross value of farm products sold in only three pairs of states. In three pairs, a lower input associated with a higher growth rate; and in three pairs, results were inconclusive. In the 1950-54 period, three pairs associated higher input with higher growth rates and six pairs associated higher inputs with lower growth rates. Perhaps, extension's effectiveness is declining. The 48 continental states were then ranked with reference to the rate of change in gross values of farm products sold as a percentage of the average rate for all 48 states. Quartiles within this distribution were com1 Agricultural Economics Contribution Number 373, Economics and Sociology Con