Allen M. Featherstone

An Examination of Farm Sector Real Asset Dynamics: 1910–85

The dynamic response of real farm asset values to changes in net returns and interest rates is studied using vector autoregression. Results show that a shock in real asset values, real returns to assets, or real interest rates leads to a process in which real asset values overreact. In the initial period, a reaction to a shock immediately occurs followed by a continued build-up in the asset value for up to six years until finally the effect of the one-time, transitory shock begins to die out. The results suggest a market with a propensity for bubbles.

FUNDAMENTAL q, CASH FLOW, AND INVESTMENT: EVIDENCE FROM FARM PANEL DATA

This study used a 19761992 panel data set to test whether farm machinery investors face finance constraints. Tests were based on fundamental q investment equations in which cash flow was added as an additional explanatory variable. Results indicated that (1) credit constraints were generally not a problem during the 1970s boom, (2) credit constraints became a problem during the 1980s and early 1990s because of tighter credit and/or more conservative financial managerial styles, (3) the investment-cash flow relationships of low-debt and older-operator farms were not significantly affected by farm business cycles, and (4) the investment-cash flow relationships of high-debt and young-operator farms were affected strongly by business cycles. Debt level was the strongest determinant of credit constraints; asset size and operator age were less important.

Financial Performance, Risk, and Specialization

A sample of Kansas farms was used to examine the impact of risk and specialization on mean financial performance. Mean financial performance was hypothesized to be influenced by risk, age of the operator, percentage of acres owned, financial efficiency, leverage, specialization, and farm size. Risk, age of operator, financial efficiency, and farm size had the largest impacts on mean financial performance. Specializing in swine, dairy, or crop production increased mean financial performance, while specializing in beef production decreased mean financial performance. Farms with both crops and a livestock enterprise (beef, swine, or dairy) tended to have less variability in financial performance.

Quantitative assessment of improved rice variety adoption: the farmer's perspective.

Abstract Using data collected from 400 farming households in the Casamance area of Senegal, the paper demonstrates that not only farm and farmers’ characteristics, but also farmers’ perceptions of technology-specific characteristics, significantly influence adoption decisions relating to improved rice varieties. Farmers’ perceptions about improved rice varieties were quantified using a quasi-arbitrary ordinal weighting system, based on a methodology first used in industry. The results of Tobit regression analysis including variables representing both farmers’ perceptions, as well as farm and farmer characteristics, were found to be important in determining the decision to adopt and the intensity of adoption of the improved rice varieties. We conclude, based on the results in the paper, that it is important for farmers, with the help of on-farm interdisciplinary farming systems teams, to provide an input into the rice breeding program of the Senegal Agricultural Research Institute during the process of rice variety development, rather than only having an opportunity to evaluate the varieties at the end of the research cycle. We believe that quantifying farmers’ perceptions in the manner suggested in the paper potentially makes them more palatable to station-based researchers used to cardinal types of analysis. Our findings also provide support for the farmer participatory crop breeding programs that have become popular in recent years in both international and national research systems.

A NONPARAMETRIC ANALYSIS OF EFFICIENCY FOR A SAMPLE OF KANSAS BEEF COW FARMS

Competitive pressures in the cow-calf sector increased in 1995 because of a decline of 27% in calf prices. Technical, allocative, and scale efficiency measures were used to examine the competitiveness of a sample of Kansas beef cow farms. On average, the farms were 78% technically efficient, 81% allocatively efficient, and 95% scale efficient. Enterprise profitability was correlated positively with the efficiency measures. Inefficiency was related to herd size and degree of specialization. Producers should focus on using capital, feed, and labor more efficiently rather that increasing their size. Increased concentration of the cow-calf sector will not result in large cost savings given the current technology.

A comparison of crop production functions using simulated data for irrigated corn in western Kansas

Abstract A synthetic approach is used to deal with lack of available yield data for production function estimation. Corn yield data from the CERES-Maize simulator for western Kansas are used to estimate yield response to nitrogen and irrigation water using five functional forms: quadratic; square root; Mitscherlich-Baule; linear von Liebig; and nonlinear von Liebig. Each is compared with the others using non-nested hypothesis tests. The Mitscherlich-Baule function is found to be favored over each of the other specifications using pair-wise comparisons as well as a joint test. However, this model also was rejected in favor of the nonlinear von Liebig function in a pair-wise comparison. Optimal input levels are comparable with research based on actual yield data. Optimal nitrogen levels are found to be somewhat higher using simulated data than using actual data, with optimal water levels being greater and less than the average amount used in the area. Costs of incorrectly using the Mitscherlich-Baule are relatively low. Substantial costs exist when the linear von Liebig is incorrectly used. The costs of using the nonlinear von Liebig when the Mitscherlich-Baule function is correct are higher than incorrectly using the Mitscherlich-Baule.

The Theoretical Effects of Farm Policies on Optimal Leverage and the Probability of Equity Losses

The degree to which the use of debt is increased in response to risk-reducing and income-augmenting farm policies is studied theoretically. A mean-variance model is used to determine the optimal leverage adjustment, then the effects of policies on the cumulative probability of earning very low rates of return on equity are examined. The evidence suggests that farm policies induce a large enough increase in financial leverage to increase the probability of farmers having negative returns to equity.

A Nonparametric Efficiency Analysis For A Sample Of Kansas Swine Operations

This study evaluates the economic competitiveness of a sample of Kansas farrow-to-finish operations by estimating relative firm efficiency using nonparametric mathematical programming techniques. Measures of technical, allocative, scale, economic, and overall efficiency are then related to farm characteristics to identify sources of efficiency. Results indicate that overall efficient farms produce a high quantity of pork per litter, produce a portion of their own feed grains, generate a large portion of their income from swine and other livestock enterprises, and have a lower debt-to-asset ratio.

Propensity to Consume Farm Family Disposable Income from Separate Sources

Farm family disposable income is generated from farm operations, off-farm sources, and government payments. If these three income components are fungible (a dollar from one source is a perfect substitute for a dollar from another source), then the propensities to consume each should be the same. This study examines the farm family propensity to consume from separate income sources. Results indicate that the propensity to consume off-farm income and government payments is higher than the propensity to consume farm income.

Factors Influencing Kansas Agricultural Farm Land Values

Land transactions typically involve a substantial investment of time and money for parties involved in the sale. Because of the size of the investment and infrequency of purchases/sales, significant personal interaction between buyer and seller often results. In this study, farmland sales in 104 of 105 Kansas counties from 1986–2000 were examined to quantify the influence of personal relationships and changes over time. Transactions between related parties resulted in a 43% discount on the per acre sales price. Results indicated that social capital effects have increased over time, with the discount on sales between related parties growing 2% per year. (JEL Q12, Q14)