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What is driving economic and financial success of US cow-calf operations?

Author

Listed:
  • Richard Nehring
  • Jeffery Gillespie
  • Charles Hallahan
  • James Michael Harris
  • Ken Erickson

Abstract

Purpose - – The purpose of this paper is to determine the drivers of economic financial success of US cow-calf operations. Design/methodology/approach - – This research uses a system of equations (DuPont analysis) in conjunction with 2008 farm-level data from the US Department of Agriculture's Agricultural Resource Management Survey to evaluate the factors driving cow-calf profitability, namely net profit margins, asset turnover ratio, and asset-to-equity ratio. Findings - – The study finds that the main drivers of return on equity are region, number of harvested acres on the farm, diversification of the farm, operator off-farm work, spousal off-farm work, and adoption of technologies. Of these factors, those for which producers can make short-term adjustments include off-farm work decisions and adoption of technologies. Longer-term adjustments can be made for farm diversification. Originality/value - – To the authors’ knowledge, no existing research has used farm-level data across US production regions to examine the factors affecting returns to equity of US cow-calf operations. These research results may be used to identify strategies producers can use to improve their farm's economic viability, areas where extension services can assist farmers in making better financial decisions and economic factors that are likely to lead to structural changes in the beef industry.

Suggested Citation

  • Richard Nehring & Jeffery Gillespie & Charles Hallahan & James Michael Harris & Ken Erickson, 2014. "What is driving economic and financial success of US cow-calf operations?," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 74(3), pages 311-325, August.
    • Handle: RePEc:eme:afrpps:v:74:y:2014:i:3:p:311-325
    DOI: 10.1108/AFR-02-2013-0007
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    Citations

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    Cited by:

    1. Diersen, Matthew A. & Fausti, Scott W., 2019. "Feedlot Size, Backgrounding Behavior, and Management Practices," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2019.
    2. Nehring, Richard & Gillespie, Jeffrey & Katchova, Ani L. & Hallahan, Charlie & Harris, J. Michael & Erickson, Ken, 2015. "What’s Driving U.S. Broiler Farm Profitability?," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 18(A), pages 1-20, July.
    3. Nehring, Richard F. & Badau, Flavius & Harris, Michael & Erickson, Kenneth W., 2017. "Relative Competitiveness of Crop/Livestock Farms: A current perspective," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258234, Agricultural and Applied Economics Association.
    4. Radosław Pastusiak & Michał Soliwoda & Magdalena Jasiniak & Joanna Stawska & Joanna Pawłowska-Tyszko, 2021. "Are Farms Located in Less-Favoured Areas Financially Sustainable? Empirical Evidence from Polish Farm Households," Sustainability, MDPI, vol. 13(3), pages 1-26, January.

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