Scale Economies and Efficiency in U.S. Agriculture: Are Traditional Farms History?

The structural transformation of agriculture in recent decades has raised serious concerns about the future of the family farm. This study examines the economic performance of U.S. farms, to explore the potential of smaller farms to compete with larger entities, and ultimately to survive in this rap...

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Bibliographic Details
Published in:Journal of productivity analysis 2004-11, Vol.22 (3), p.185-205
Main Authors: PAUL, CATHERINE MORRISON, Paul, Catherine, NEHRING, RICHARD, BANKER, DAVID, SOMWARU, AGAPI
Format: Article
Language:English
Subjects:
Agriculture
Commercial production
Corn
Crop economics
Crops
Data envelopment analysis
Econometrics
Economic efficiency
Economic models
Economic theory
Economics
Economies of scale
Efficiency metrics
Elasticity
Family farms
Family owned businesses
Farm economics
Farmers
Farms
Productivity
Stochastic models
Studies
Trends
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Summary:The structural transformation of agriculture in recent decades has raised serious concerns about the future of the family farm. This study examines the economic performance of U.S. farms, to explore the potential of smaller farms to compete with larger entities, and ultimately to survive in this rapidly changing environment. We use deterministic and stochastic frontier methods and survey data to measure and evaluate factors underlying scale economies (SEC) and efficiency (SEF) of corn-belt farms for 1996-2001. Our results suggest that family farms are both scale and technically inefficient. Potential for the exploitation of significant scale and scope economies, and some greater technical efficiency, seem to be driving trends toward increased farm size and dwindling competitiveness of the small family farm.
ISSN:0895-562X
1573-0441
DOI:10.1007/s11123-004-7573-1