Agricultural profits and farm household wealth

Recent decades (especially since 1973) have been an era of decreasing production profits that threaten the survival of many mid- and small-sized American farms. Normally, the survival of a firm depends on its profitability, both in absolute and relative terms. Yet, American agriculture is full of fi...

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Bibliographic Details
Published in:American journal of agricultural economics 2004-12, Vol.86 (5), p.1299-1307
Main Authors: Blank, Steven C., Erickson, Kenneth W., Moss, Charles B., Nehring, Richard
Format: Article
Language:English
Subjects:
Agricultural economics
Agricultural households
Agricultural productivity
Agricultural profit
Agriculture
Capital gains
Commodities
Convergence
Corn
Cost control
econometric models
Economic theory
equations
Family farms
Farm commodities
Farm economics
farm families
Farm income
Farmers
Farming
Farms
Household income
Households
income and wealth
Industrial agriculture
Investment
L250
Microeconomics
Productivity
Profit and Productivity Patterns from the Farm-Gate to the Global Marketplace: Implications for American Agricultural Competitiveness
Profitability
Profits
profits and margins
Q120
Rates of return
Regression analysis
Studies
Sustainable agriculture
U.S.A
Wealth
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Summary:Recent decades (especially since 1973) have been an era of decreasing production profits that threaten the survival of many mid- and small-sized American farms. Normally, the survival of a firm depends on its profitability, both in absolute and relative terms. Yet, American agriculture is full of firms that routinely earn low or negative returns on equity from production operations, thus complicating the evaluation of the industry's economic health and prospects. This suggests that macro-level forecasts of American agriculture's future structure and performance require a micro-level understanding of the relationship between farm profits and owner wealth. Three objectives are sought. The first objective is to determine whether or not there is convergence of rates of return on farm assets across states over time. The second objective is to derive a system of equations that explains interlinkages between the various components of a farm household's wealth at some point in time. The third objective is to use those equations to empirically assess income and wealth patterns across regions, farm sizes, and commodity specializations.
ISSN:0002-9092
1467-8276
DOI:10.1111/j.0002-9092.2004.00681.x