Ray D. Bollman

Family farm dynamics in Canada and Israel: the case of farm exits

Canada is one of the few countries for which data exist on individual family farms over time. Using these data, researchers have been able to show that much of the microdynamics of family farms in Canada (e.g. changes in size distribution) can be attributed to farmer entry and exit. However, the behavioral aspects of the exit decision received little attention in the literature. A comparison of Canadian and Israeli data could help us understand these behavioral aspects because of the vast institutional differences between the farm sectors in the two countries, and the possible effect of the institutional setup on exit decisions. Comparison of exit patterns may enable us to identify the dependence of farmers mobility on the institutional setup. This may also have policy relevance. In both Canada and Israel, exit probability decreases with the extent of off-farm work. We conclude that off-farm work is complementary rather than a substitute for farm work, perhaps due to its less volatile nature. Both, Canadian and Israeli farmers over a certain age are more likely to exit as they become older, which is a natural result, but exit probability in Canada rises much faster with age than in Israel. The major difference between Canadian and Israeli farm-exit patterns lies in the farm size. Farm size decreases exit probability in Canada but increases it in Israel. Perhaps this is because Israeli farm exits are less planned in advance than Canadian exits. Institutional constraints on land transactions in Israel may also play a role.

Farm Size and Growth in Canada

In this paper, we empirically examine the relationship between farm size and growth in Canada over the period 1966-81. The analysis is undertaken by testing Gibrats Law of Proportionate Effect. Gibrat offered the hypothesis that the percentage growth rates of firms are independent of their initial size. Thus, growth is a purely stochastic process that arises from the cumulative effect of the random operation of a multitude of forces acting independently of each other. An important outcome of models based on Gibrats law is that the stochastic process results in a size distribution of firms which is skewed and not unlike the size distribution actually observed. In particular, it is well known that, depending on the precise formulation, the operation of Gibrats law leads to a skewed size distribution which is either log normal (Prais) or pareto (Steindl, Ijiri and Simon). Although it is difficult to determine the exact form of observed size distributions, it is generally agreed that either of the above provides a reasonable approximation to reality, depending on the industry or sector being observed. By contrast, a deterministic model of firm growth based strictly on standard cost theory either predicts the facts incorrectly or it makes no prediction at all (Ijiri and Simon, p. 10). Although there are models combining cost theory with assumptions about the adjustment process which result in skewed size distributions (e.g., Lucas), the testing of Gibrats law remains as an important point of departure for the analysis of firm growth. An additional feature of models based on

The Microdynamics of Farm Structural Change in North America: The Canadian Experience and Canada-U.S.A. Comparisons

Large gross flows of entry into and exit from agriculture combined with paths of expansion and contraction by continuing farmers produce the modest but persistent net changes in the economic concentration of agriculture observed in Canada and the adjacent states of the northern United States. Relatively minor proportional changes in these gross flows can produce major proportional changes in net rates of structural change which are observed from one census to the next. Between 1976 and 1981, for example, there was a small net decline (5.9%) in the number of Canadian farm operators from 337,782 to 317,758 which resulted from 29.7% of the 1976 farm operators (100,325) exiting from agriculture and 25.3% of the 1981 farm operators (80,301) who entered agriculture during this five-year interval. Imagine a set of circumstances that would moderately increase the exit rate and modestly decrease the entry rate; the result would be a rapid net decline in farm numbers akin to the rural exodus of the 1950s. Entry, exit, and farm operator mobility flows shape the process of economic concentration and the accompanying reorganization of farm enterprises, such as an increased use of hired, nonfamily labor. A microdata base which can trace these gross flows is a prerequisite for understanding structural change in modem agriculture. Statistics Canada has developed what is perhaps the most advanced agricultural microdata base currently available to researchers. Files from the agricultural censuses for 1966, 1971, 1976, and 1981 have been linked in order to follow paths of contraction, stability, or expansion of individual farmers over time. Individual files from the general census of population for 1971 and 1981 have also been linked to files in the census of agriculture. Factors such as education and the total input of labor and income by farm operator families can then be linked to farm variables in order to deepen our understanding of the changing structure of modern agriculture.

Returns to Operator Education in Saskatchewan Agriculture

Estimates of the rate of return to education in agricultural production indicate, for the most part, that education enhances the decision-making ability of farmers in an environment of rapid technological changz. Welch has hypothesized that there are more opportunities for education to allocate resources across enterprises in an aggregate function than in a single-product production function. The estimates that indicate a high rate of return to education have related to both aggregate production functions (Huffman) and farm level production functions (Wu). Patrick and Kehrberg found both positive and negative returns to education in agricultural production functions in Brazil. The purpose of this paper is threefold. First we wish to examine the inherent disequilibrium in Saskatchewan agriculture. This was accomplished by estimating the returns to scale that currently exist in the agricultural production function. Second, we wished to determine if education is an important input in the farm operation. Finally, we tested the hypothesis that the larger the number of enterprises in the firm, the higher the returns to education. This hypothesis was tested using farm firm productionfunction estimates on grain farms as compared to grain-livestock farms. It was assumed that grainlivestock farms have more enterprises than grain farms. On grain farms, a farmer can allocate resources across crops; however, these same decisions should be available to grain-livestock farmers. Following the hypothesis set out by Welch, we expect a higher return to education on grainlivestock (GL) farms than on grain (G) farms.

An Analysis of Socio-Economic Strains and Population Gains:Urban and Rural Communities of Canada 1981-2001

Important demographic shifts have occurred in Canada in the last decades. As a consequence of these shifts, many geographical communities have won or lost substantial number of residents between 1981 and 2001. Using the CCS (consolidated census subdivision) data set of the Agriculture Division of Statistics Canada, the paper explores the linkages between socio-economic strains and population changes affecting communities in a variety of regional and provincial contexts. A total of 2,607 rural and urban consolidated census subdivisions were examined across five census periods. Quasi simplex structural equation models using unemployment, earnings and poverty as indicators were tested on a variety of communities located in various OECD regions and provinces. Although the predictive power of strains on population gains was found to be limited in the models, a higher level of strain was persistently found to be negatively associated with population gains regardless of regional and provincial groupings of communities. Socio-economic strains were also observed to be relatively stable over time across a variety of geographies.