Richard F. Nehring

Agricultural Productivity Revisited

This paper describes production accounts for agriculture. Output is defined as gross production leaving the farm as opposed to real value added. Inputs are not limited to capital and labor but include intermediate inputs as well. We derive index numbers of gross output, capital, labor, and intermediate inputs. These data are used to construct indexes of total factor productivity. We then compare the contributions of input growth and productivity growth to economic growth. The important role of productivity growth in agriculture becomes immediately apparent. Copyright 1997, Oxford University Press.

Urban Sprawl and Farmland Prices

A theoretical model of farmland valuation is developed to explicitly account for three effects of urban sprawl: conversion of farmland to urban uses, effect on agricultural returns, and speculative effect as represented by farmland conversion risk. This model is estimated using county-level data in the continental United States. Evidence is found for all three effects of urban sprawl on farmland values. Counties more accessible to major urban centers have higher net agricultural returns. Subsidiary evidence supports that the latter effect may be attributed to survival of (or conversion to) high-valued agriculture around urban centers.

Profits, Costs, and the Changing Structure of Dairy Farming

U.S. dairy production is consolidating into fewer but larger farms. This report uses data from several USDA surveys to detail that consolidation and to analyze the financial drivers of consolidation. Specifically, larger farms realize lower production costs. Although small dairy farms realize higher revenue per hundredweight of milk sold, the cost advantages of larger size allow large farms to be profitable, on average, even while most small farms are unable to earn enough to replace their capital. Further survey evidence, as well as the financial data, suggest that consolidation is likely to continue.

Environmental Indicators of Pesticide Leaching and Runoff from Farm Fields

The purpose of this chapter is to present an indicator of how changes in pesticide use in agriculture have changed the potential for risk to human health and the environment from pesticide contamination of water leaving farm fields. Environmental indicators are designed to be relative estimates of potential risk that are based on pesticide use and on the factors that are known to be important determinants of pesticide loss from farm fields, such as the intrinsic potential of soils to leach or runoff pesticides, the chemical properties of the pesticides, annual rainfall and its relationship to leaching and runoff, and changes in cropping patterns. The analytical framework consists of about 4,700 resource polygons representing the intersection of 48 states, 280 watersheds at the 6-digit Hydrologie Unit level, and 1,400 combinations of climate and soil groups. Twelve crops are included in the analysis: corn, soybeans, wheat, cotton, sorghum, barley, rice, potatoes, oats, sugarbeets, tobacco, and peanuts. Model estimates of pounds of pesticides applied, mass loss, and annual concentrations leaving the farm field (edge of field and bottom of root zone) were obtained for pesticides used on each of the 12 crops in each of the resource polygons for each year from 1960 through 1997. Indicators of potential risk are constructed from estimates of annual concentrations that exceed “safe” thresholds for chronic exposure to four target groups — humans, fish, crustaceans, and algae. It is expected that temporal and spatial trends of these indicators will closely track the change in potential risk to human health and the environment from agricultural use of pesticides.

Effective Costs and Chemical Use in United States Agricultural Production: Using the Environment as a “Free” Input

A cost-function-based production model is used to represent patterns of input use and output production in U.S. agriculture, and the implied costs of induced reductions in risk from agricultural chemicals (“bad outputs”). We estimate and evaluate shadow values for these harmful outputs, and the implied input- and output-specific substitution patterns, with a focus on the impacts on pesticide demand and its quality and quantity components. Using state-level data we find these measures to be statistically significant, vary substantively by region, and imply increased demand for effective pesticides associated with improvements in quality from embodied technology. Copyright 2002, Oxford University Press.

Urban Influence on Costs of Production in the Corn Belt

This article determines the relative technical efficiency of rural- and urban-influenced crop/livestock enterprises in the Corn Belt. Farmers in urban-influenced locations are less technically efficient than farmers in rural locations. During 1998–2000, stochastic production frontier procedures indicate that a 10% increase in urban influence leads to a close to 4% decrease in technical efficiency. The most successful urban-influenced farms have controlled costs as effectively as rural farms. They have tended to de-emphasize that nondairy livestock activities—particularly beef and hogs—do not rely extensively on off-farm income, and have relatively large, less residential/lifestyle operations compared to less successful urban-influenced farmers. However, our statistical analysis clearly bears out the refrain in popular literature that urban proximity raises the cost for, and decreases the viability of, traditional farms. Copyright 2006, Oxford University Press.

U.S. Agriculture, 1960–96: A Multilateral Comparison of Total Factor Productivity

This study provides estimates of the growth and relative levels of agricultural productivity for the 48 contiguous States for the period 1960 to 1996. For the full 1960-96 period, every State exhibits a positive and generally substantial average annual rate of productivity growth. There is considerable variance, however. The wide disparity in growth rates resulted in substantial changes in the ranking order of States by productivity. For each year, we calculate the coefficient of variation of productivity levels. We use these coefficients to show that the range of levels of productivity has narrowed over time, although the pattern of convergence was far from uniform. The fact that in some States, productivity grew faster than others and yet the cross-section dispersion decreased, implies that the States whose productivity grew most rapidly were those with lower initial levels of productivity. This result is consistent with Gerschenkrons notion of the advantage of relative backwardness. The States that were particularly far behind the productivity leaders had the most to gain from the diffusion of technical knowledge and proceeded to grow most rapidly. We also observe a positive relation between capital accumulation and productivity growth, implying embodiment of technology in capital.

Agricultural Profits and Farm Household Wealth: A Farm-level Analysis Using Repeated Cross Sections

This study examines the relationship between agricultural profits and farm household wealth across locations and farm sizes in U.S. agriculture. A multiperiod household model is used to develop hypotheses for testing. Results indicate that farmland has out-performed nonfarm investments over the past decade. Thus, households may want to keep their farmland to build wealth, even if it requires them to earn off-farm income. The analysis implies that decision will be made based on farm household wealth factors having little to do with agriculture.

Pesticide Use in U.S. Agriculture: 21 Selected Crops, 1960-2008

Pesticide use has changed considerably over the past five decades. Rapid growth characterized the first 20 years, ending in 1981. The total quantity of pesticides applied to the 21 crops analyzed grew from 196 million pounds of pesticide active ingredients in 1960 to 632 million pounds in 1981. Improvements in the types and modes of action of active ingredients applied along with small annual fluctuations resulted in a slight downward trend in pesticide use to 516 million pounds in 2008. These changes were driven by economic factors that determined crop and input prices and were influenced by pest pressures, environmental and weather conditions, crop acreages, agricultural practices (including adoption of genetically engineered crops), access to land-grant extension personnel and crop consultants, the cost-effectiveness of pesticides and other practices in protecting crop yields and quality, technological innovations in pest management systems/practices, and environmental and health regulations. Emerging pest management policy issues include the development of glyphosate-resistant weed populations associated with the large increase in glyphosate use since the late 1990s, the development of Bt-resistant western corn rootworm in some areas, and the arrival of invasive or exotic pest species,such as soybean aphid and soybean rust, which can influence pesticide use patterns and the development of Integrated Pest Management programs.

Adoption of Technology, Management Practices, and Production Systems by U.S. Beef Cow-Calf Producers

Using USDA’s Agricultural Resource Management Survey data, factors leading to the adoption of technology, management practices, and production systems by U.S. beef cow-calf producers are analyzed. Binary logit regression models are used to determine impacts of vertical integration; region of the U.S.; farm size, diversification, and tenure; and demographics on adoption decisions. Significant differences were found in adoption rates by region of the U.S., degree of vertical integration, and size of operation, suggesting the presence of economies of size and vertical economies of scope. Results also indicate high degrees of complementarity among technologies, management practices, and production systems.