Hostname: page-component-78c5997874-g7gxr Total loading time: 0 Render date: 2024-11-19T15:41:55.216Z Has data issue: false hasContentIssue false
  • English
  • Français

Factors Contributing to Earnings Success of Cash Grain Farms

Published online by Cambridge University Press:  28 April 2015

Ashok K. Mishra ,
Hisham S. El-Osta  and
James D. Johnson
Ashok K. Mishra
Affiliation:
Economic Research Service, U.S. Department of Agriculture, Washington, DC
Hisham S. El-Osta
Affiliation:
Economic Research Service, U.S. Department of Agriculture, Washington, DC
James D. Johnson
Affiliation:
Economic Research Service, U.S. Department of Agriculture, Washington, DC
Get access Rights & Permissions [Opens in a new window]

Abstract

The objective of this study was to identify factors which contribute to the earnings' success of cash grain farms in the United States. The study analyzes three measures of success including net farm income per dollar of asset, operators' returns to labor and management, and operators' management income. Logit regression analysis shows that controlling variable costs, ownership, management ability, technology adoption, and diversification are important factors that influence success.

Keywords

cash grainsdiversificationearnings successlogit regression
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 31 , Issue 3 , December 1999 , pp. 623 - 637
Copyright
Copyright © Southern Agricultural Economics Association

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Alchian, A.A. and H. Demsetz, . “Production, Information Costs, and Economic Organization.” American Economic Review 62,5(December 1972).Google Scholar
Ali, M.B., and Johnson, R.G.. Factors Influencing Economic Success of North Dakota Farms. Agricultural Economics Report No. 223, North Dakota State University, June 1987.Google Scholar
Bailey, D.V., Biswas, B., Kumbhakar, S.C., and Schulthies, B.K.. “An Analysis of Technical, Allocative, and Scale Inefficiency: The Case of Ecuadorian Dairy Farms.” Western Journal of Agricultural Economics 14(July 1989):30–37.Google Scholar
Barry, P.J. (Ed.). Risk Management in Agriculture. Iowa State University Press, Ames, 1984.Google Scholar
Barry, P.J. and Fraser, D.R.. “Risk Management in Primary Agricultural Production: Methods, Distribution, Rewards, and Structural Implications.” American Journal of Agricultural Economics 58(1976):286–295.CrossRefGoogle Scholar
Becker, G. S.Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education. New York: National Bureau of Economic Research and Columbia University Press, 1975.Google Scholar
Berkson, J. “Application of the Logistic Function to Bio-Assay.” Journal of American Statistical Association 39(1944):357–365.Google Scholar
Boggess, W.G., Anaman, K.A., and Hanson, B.D.. “Importance, Causes, and Management Responses to Farm Risks: Evidence from Rorida and Alabama.” Southern Journal of Agricultural Economics 17(1985): 106–116.Google Scholar
Burton, R.O. Jr. and Abderrezak, Ali. Expected Profit and Farm characteristics. Contribution No. 89–32-D Manhattan: Agricultural Experiment Station, Kansas State University, July 1988.Google Scholar
Crane, L., “Using Budget Analysis to Identify and Manage Risks.” Crop Insurance Today 32,2(1999):9–13.Google Scholar
Cunningham-Dunlop, C.A Five-Year Analysis of New York Egg Farm Management Factors. Agricultural Economic Research 82–18. Ithaca: Department of Poultry and Avian Sciences, Cornell University, June 1982.Google Scholar
Curtis, C.E., Pfeiffer, G.H., Lutgen, L.L., and Frank, S.D.. “A Target MOTAD Approach to Marketing Strategy Selection for Soybeans.” North Central Journal of Agricultural Economics 9(1987): 195–206.CrossRefGoogle Scholar
Downey, W.D. and Trocke, J.K.. Agribusiness Management. New York: McGraw-Hill, 1981.Google Scholar
El-Osta, H.S. and Ahearn, M.C.. Estimating the Opportunity Cos of Unpaid Farm Labor for U.S. Farm Operators. Technical Bulletin # 1848, Economic Research Service, U.S. Department of Agriculture, Washington D.C, 1996.Google Scholar
Ellinger, P.N., Barry, P.J., Frey, T.L., and Scott, J.T. Jr.Financial Characteristics of Illinois Farms 1985–1986. University of Illinois at Urbana-Champaign, Department of Agricultural Economics, 1987.Google Scholar
Forbes, Stan (Chairman). Recommendations of the Farm Financial Standards Task Force: Financial Guidelines for Agricultural Producers. Financial Accounting Standards Board, Norwalk, Connecticut, 1991.Google Scholar
Ford, S.A. and Shonkwiler, J.S.. “The Effect of Managerial Ability on Farm Financial Success.” Agricultural and Resource Economics Review 23,2(1994): 150–157.CrossRefGoogle Scholar
Frazier, J.H. Jr. “Commentary.” Review of Research in Futures Markets 4,1(1984):29–30.Google Scholar
Garcia, P., Sonka, S.T.., and Yoo, M.S.. “Farm Size, Tenure, and Economic Efficiency in a sample of Illinois Grain Farms.” American Journal of Agricultural Economics 64(1982): 119–123.CrossRefGoogle Scholar
Haden, K.L. and Johnson, L.A.. “Factors Which Contribute to Financial Performance of Selected Tennessee Dairies.” Southern Journal of Agricultural Economics 21(1989): 105–112.Google Scholar
Hackbart, M.M. and Anderson, D.A.. “On Measuring Economic Diversification': Reply.” Land Economics 54(1978): 111–112.Google Scholar
Haydu, J.J., Myers, R.J., and Thompson, S.R.. “Why Do Farmers Forward Contract in Factor Markets?” Southern Journal of Agricultural Economics 24,145(1992).Google Scholar
Hoffman, Robbin. “Size and Profitability: It's Better to Be Good than Big, But You Can't Beat Good and Big.” Farm Journal(Mid-March 1996):2–3.Google Scholar
Holt, M.T. and Brandt, J.A.. “Combining Price Forecasting with Hedging of Hogs: An Evaluation Using Alternative Measures of Risk.” The Journal of Futures Markets 5(Fall 1985):209–309.CrossRefGoogle Scholar
Huffman, W.E. “Farm and Off-Farm Work Decisions: The Role of Human Capital.” Review of Economics and Statistics LXII(1980): 14–23CrossRefGoogle Scholar
Hurd, B.H. “Yield Response and Production Risk: An Analysis of Integrated Pest Management in Cotton,” Journal of Agricultural Resources Economics 19,313(1994).Google Scholar
Johnson, J.D., R. Prescott, ., D. Banker, ., and M. Morehart, . Financial Characteristics of U.S. Farms., January 1, 1986. Washington D.C. AIB-500, Economic Research Service, U.S. Department of Agriculture, August, 1986.Google Scholar
Jones, J., and Canning, P. N.. Farm real Estate: Historical Series Data, 1950–1992. SBN-855, Washington DC, USDA-ERS, 1992.Google Scholar
Kmenta, Jan.Elements of Econometrics (2d edition), Macmillian Publishing Company, New York, 1971.Google Scholar
Kauffman, J., B., and Tauer, L.W.. “Successful Dairy Farm management Strategies Identified by Stochastic Dominance Analysis of Farm Records.” Northeastern Journal of Agricultural and Resource Economics 15(1986): 168–77.CrossRefGoogle Scholar
Korth, B.D. Factors, for Determining Financial Success for Farm Managers. Unpublished M.Sc. Thesis: University of Nebraska, Lincoln, November 1984.Google Scholar
Laband, D., N., and Lentz, B.F.. “Occupational Inheritance in Agriculture.” American Journal of Agricultural Economics 65(1983):311–314.CrossRefGoogle Scholar
Lins, D., Ellinger, P., and D. Lattz, . “Measurement of Financial Stress in Agriculture.” American Finance Review 47(1987):43–52.Google Scholar
Luckham, W. R. “Financial Ratios for Grade A Dairy Farms in Virginia.” Farm Credit Administration Research Journal 1(1976):18–24.Google Scholar
Melichar, Emanuel. “Capital Gains versus Current Income in the Farming Sector.” American Journal of Agricultural Economics 61(1979): 1085–1102.CrossRefGoogle Scholar
Morehart, M. J., Johnson, J. D., and Banker, D.E.. Financial Performance of U.S. Farm Businesses, 1987–1990. Washington DC. AER-66, Economic Research Service, U.S. Department of Agriculture, August, 1986.Google Scholar
Mykrantz, J. L., Hamm, L.G., and Connor, L. J.. “An Analysis of Selected Management Practices and Demographic characteristics of Michigan Dairy Farms.” Agricultural Economics Report No. 537. Department of Agricultural Economics, Michigan State University, July, 1990.Google Scholar
Nelson, F. And L. Schertz, (eds.). Provisions of the Federal Agricultural Improvement and Reform Act of 1996, AIB, U.S. Department of Agriculture, Economic Research Service, Washington DC, 1996.Google Scholar
Newbery, D.M.G. and J. Stiglitz, . The Theory of Commodity Price Stabilization. Chapters 12 and 13, Oxford: Clarendon Press, 1981.Google Scholar
Osburn, D. D. “An Analysis of Factors Influencing Loan Losses Among Production Credit Association.” Farm Credit Administration Research Journal 3(1978):18–24.Google Scholar
Paul, A.B., Heifner, R.G., and Gordon, J.D.. Farmers' Use of Cash Forward Contracts, Futures Contracts, and Commodity Option., U.S. Department of Agriculture, Economic Research Services, Washington DC, December AER 533, 1985.Google Scholar
Patrick, G.R. “Producers' Attitudes, Perception and Management Responses to variability.” In Risk Analysis for Agricultural Production Firms: Concepts, Information Requirements and Policy Issues. Department of Agricultural Economics, University of Illinois; AE-4574, July, 1984, 197–256.Google Scholar
Pearse, R.A. “A Study of Relationships Used in Farm Record Analysis.” Research Bulletin 911. Columbia, Agricultural Experiment Station, University of Missouri, 1966.Google Scholar
Perry, J.E. Returns to Labor from Farm and Non-Farm Employment. Unpublished Ph.D. Dissertation, Department of Agricultural Economics, Oklahoma State University, Stillwater, 1990.Google Scholar
Perry, P.E., Johnson, J.D., and Morehart, M.J.. “Farmers' Risk Management Strategies.” Economic Research Service, Briefing Paper, Rural Economy Division, ERS, U.S. Department of Agriculture, Washington DC, 1995.Google Scholar
Perry, P.E., Johnson, J.D.. “Management Decisions Made by U.S. Farmers.” Discussion Paper, Presented at AAEA Annual Meetings, July 28–31, 1996 San Antonio, TX.Google Scholar
Pindyck, R., and D. Rubenfeld, . Econometric Models and Economic Forecasts (3d edition). New York: McGraw-Hill, 1991.Google Scholar
Plumley, G.O., and Hornbaker, R.H.. “Financial Management Characteristics of Successful Farm Firms.” Agricultural Finance Review 51(1991): 9–20Google Scholar
Pulter, D.S. and Zilberman, D.A.. “Computer Use in Agriculture: Evidence from Talure County, California.” American Journal of Agricultural Economics 70(1988):790–802.Google Scholar
Reinsei, R.D., and A. Joseph, . The Financial Condition of Agriculture: An Income Analysis. Washington DC: ERS Staff Report AGES860710, Economic Research Service, U.S. Department of Agriculture, August, 1986.Google Scholar
Reimud, D.A., and A. Somwaru, . Farm Income by Type of Farm 1982 and 1983. Washington D.C. Staff Report AGES860710, Economic Research Service, U.S. Department of Agriculture, August, 1986.Google Scholar
Samuelson, P. “A General Proof That Diversification Pays.” Journal of Financial Quantitative Analysis 2(1967): 1–13.CrossRefGoogle Scholar
Seger, D.J., and Lins, D.A.. “Cash Versus Accrual Measures of Farm Income.” North Central Journal of Agricultural Economics 8 (1986): 219–226.CrossRefGoogle Scholar
Shapiro, B.I. and Brorsen, B.W.. “Factors Affecting Farmers' Hedging Decision.” North Central Journal of Agricultural Economics 10 (1985): 145–153.CrossRefGoogle Scholar
Simpson, W. And M. Kapitany, . “The Off-Farm Work Behavior of Farm Operators.” American Journal of Agricultural Economics 65 (1983): 801–805.CrossRefGoogle Scholar
Sonka, S.T., Hornbaker, R.H., and Hudson, M.A.. “Managerial Performance and Income Variability for a Sample of Illinois Cash Grain Producers.” North Central Journal of Agricultural Economics 11(1989):39–47.CrossRefGoogle Scholar
Strickland, R.P. “The Negative Income of Small Farms.” Agricultural Economics Research 1(1983):52–55.Google Scholar
Sumner, D.A., and Leiby, J.D.. “An Econometric Analysis of the Effects of Human Capital on Size and Growth Among Dairy Farms.” American Journal of Agricultural Economics 69 (1987):465–70.CrossRefGoogle Scholar
Theil, H. “On the Estimation of Relationship Involving Qualitative Variables.” American Journal of Sociology 76 (1970): 103–154.CrossRefGoogle Scholar
Theil, H.Statistical Decomposition Analysis, North-Holland, Amsterdam, 1972.Google Scholar
U. S. Department of Agriculture. Agricultural Statistics, National Agricultural Statistical Service, Washington DC, various issues.Google Scholar
U. S. Department of Agriculture. Economic Indicators of the Farm Sector: Costs of Production-Major Field Crops and Livestock and Dairy, 1991. ECIFS 11–3, Feb. 1994.Google Scholar
U. S. Department of Agriculture. “Farmers' Use of Marketing and Production Contracts.” Agricultural Economics Report, # 747, Economic Research Services, Washington D.C. December 1996.Google Scholar
Warren, G. F., and Burritt, M. C.. The Incomes of 178 New York Farms. Bulletin 271, Ithaca: Cornell University, 1909.Google Scholar
Warren, S. W.Factors for Success of Dairy and General Farms in Northern Livingston County, New York. Bulletin 242 Ithaca: Cornell University, 1932.Google Scholar
Wood, M.A., Johnson, R.G., and Ali, M.B.. Performance Factors and Management Practices Related to Earnings of East Central North Dakota Crop Farms. Agricultural Economics Report No. 224, North Dakota State University, August 1987.Google Scholar