Robert W. Jolly

Incidence, Intensity, and Duration of Financial Stress among Farm Firms

Over the past year, evidence on the extent of farm financial stress became available (Melichar, Jolly). However, policy makers disagree not only about the size and significance of the farm debt problems but also about the type of intervention, if any, that would be appropriate. The objective of this paper is to provide a benchmark for subsequent policy discussion. Financial stress requires definition. The absence of normal profit or returns to factors cause financial stress, yet these same forces drive the allocative mechanism of a market economy. Financial stress occurs when the capacity of an individual or firm or a specific sector of the economy to adjust to the forces causing stress is exceeded. Some stress is essential for efficiency and growth. Too much financial stress may lead to misallocation of resources, undesirable structural change, loss of economic and human capital, needed institutions, and individual well-being. Two surveys are used in this report. The USDA Farm Costs and Returns Survey (FCRS) is a probability-based sample of 23,386 farm operators contacted by enumerators between 15 February and 8 March 1985. Of these initial contacts 73% participated in the survey (Johnson, Baum, and Prescott). The FCRS collected income, cost, and balance sheet data for farm operators. The second data source was a mail survey of 4,700 Iowa farm operators conducted in March 1985. The Iowa Crop Reporting Service requested information on 1984 and 1985 financial conditions and operator characteristics. Approximately 23% of the questionnaires were returned (Jolly and Barkema).

Spatial decision support system for planning sustainable livestock production

Abstract Recent shifts toward intensive and large confined livestock production units to enhance economic growth coupled with increased concerns for air, soil, and water quality have necessitated the development of computer-based management decision support systems for selecting environmentally sound production sites and for planning sustainable production systems. An integral part of a sustainable livestock production system is the selection of appropriate land areas that meet several environmental, socio-economic, and aesthetic constraints. Traditionally, regulatory and zoning criteria, in conjunction with manual review and overlay of land cover, soils, and topographic maps, have been used to select sites for livestock production. This approach can be both time-consuming and expensive, and the land areas delineated by this method have been shown to be problematic from the odor nuisance and water pollution standpoint. A more rational approach that narrows down large areas under consideration to a finite set of optimal sites that satisfy the environmental protection goals is needed. This paper describes the development and application of an interactive spatial decision support system to delineate optimal land areas for locating a number of livestock production strategies. The spatial decision support system is based on the ARC/INFO geographic information system and incorporates the effects of land use, soil type, topography, proximity to roads and surface water bodies, and other aesthetic and political considerations, as well as multicriteria analysis techniques. The design and implementation of the system as well as an example application involving several alternative livestock production strategies are presented.

Why Do Rural Firms Live Longer

For the first thirteen years after entry, the hazard rate for firm exits is persistently higher for urban than for rural firms. While differences in observed industry market, local market, and firm attributes explain some of the rural/urban gap in firm survival, rural firms retain a survival advantage 18% greater in Iowa and 58% greater in Kansas than observationally equivalent urban firms. Evidence is consistent with a lower salvage price for the capital assets of failed rural firms. Entrepreneurs will require a higher success probability to enter a rural market rather than an urban market to leave their expected profits equal. Copyright 2010, Oxford University Press.

User Costs of Soil Erosion and Their Effect on Agricultural Land Prices: Costate Variables and Capitalized Hamiltonians

Whether land markets efficiently capture the degradation in soil quality caused by erosion is an empirical question. But the degree of efficiency cannot be ascertained from statistical estimates alone. These must be compared to the effect erosion would have on the value of land in a perfectly functioning market. The purpose of this paper is to provide the needed benchmark for comparison. Will an inefficient land market cause farmers to overexploit the soil? Do renters erode more than owners? How much does erosion cost? If soil is becoming more valuable over time, how should current decisions be altered to conserve soil for future generations? These are ancillary questions we will address as well. We begin by sketching a model for the dynamically optimal adoption of soil-conserving technologies, crop rotations, pesticide regimens, and other management practices. In a special but important case, we are able to calculate the difference in land prices that would be observed in a completely inefficient versus a perfectly efficient market. A sensitivity analysis is performed. Finally, we draw upon the theoretical and empirical results to discuss estimation strategies and offer concluding remarks.