Stephen A. Ford

Farmer sources and uses of information

This research analyzes sources of information used to make farming decisions. The findings are based on 2,537 questionnaires returned by famers in Indiana, Iowa, Illinois, and the Southeast. Farmers were discriminating in their use of 15 sources of information for nine farm level decisions. Sources of information did not vary widely among types of farm, years of farming, and region. There were wide differences in the use of written versus personal|service information forms and between public and private providers. These differences suggest segments of the information market that might best be served by different providers.

THE EFFECT OF MANAGERIAL ABILITY ON FARM FINANCIAL SUCCESS

The effects of managerial ability on farm financial success are analyzed for a 1990 sample of Pennsylvania commercial dairy farms using structural latent variable techniques. Latent factors related to dairy, crop, and financial management are used with herd size to explain farm financial success, measured by net farm income. Results indicate the relative importance of each management variable toward farm financial success.

Health Insurance Coverage for Pennsylvania Dairy Farm Managers

A survey of more than 1200 Pennsylvania dairy farm managers showed that almost 20% of those managers do not have health insurance. Of those farm managers with health insurance, 67% had insurance acquired through the farm business. Farm characteristics and demographic information were used to determine indicators of health insurance coverage. Age, education, net farm income, off-farm income, milk marketing cooperative membership, and intensity of hired labor use all had significant effects on the likelihood of having health insurance and on whether such insurance was provided by the farm business.

The Lease-Purchase Decision for Agricultural Assets

The decision to lease or purchase an asset is analyzed with methodology adapted from the corporate finance literature. The methodology allows determination of a break-even lease payment using a minimum of information. Symmetry between the lessee and lessor is also examined. Effects of changes in the discount rate, marginal tax rate, capital rationing, and other parameters on break-even lease payments are examined analytically and numerically. Analysis of differences in the parameters of the lessee and lessor identifies conditions under which markets for leasing arrangements will exist.

EVALUATION OF ALTERNATIVE RISK SPECIFICATIONS IN FARM PROGRAMMING MODELS

The use of alternative probability density functions to specify risk in farm programming models is explored and compared to a traditional specification using historical data. A method is described that compares risk efficient crop mixes using stochastic dominance techniques to examine impacts of different risk specifications on farm plans. Results indicate that a traditional method using historical farm data is as efficient for risk averse producers as two other methods of incorporating risk in farm programming models when evaluated using second degree stochastic dominance. Stochastic dominance with respect to a function further discriminates among the distributions, indicating that a density function based on the historic forecasting accuracy of the futures market results in a more risk-efficient crop mix for highly risk averse producers. Results also illustrate the need to validate alternative risk specifications perceived as improvements to traditional methods.