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Farm Business Goals And Competitive Advantage

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  • Stark, Christopher E.
  • Moss, Leeann E.
  • Hahn, David E.
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    Abstract

    This paper investigates empirically the relationship between both farm business goals and sources of competitive advantage, and various farm and producer characteristics using new primary data collected from a survey of Ohio farmers. Results show that most farmers do not recognize sources of competitive advantage and practice strategy implementation beyond reliance on longstanding paradigms for success within the context of government farm program support and the use of traditional risk management tools. However, several key insights emerge. Farmers who engage in cost leadership strategies are more profitable. Farmers who suggest that the goal of their farming operation is to enhance profitability/efficiency use more management tools, while lifestyle farmers use fewer. Larger farmers are more apt to engage in a cost leadership strategy, while those with higher debt-to-asset ratios and those that are more livestock oriented are more likely to engage in differentiation or focus strategies. Smaller farmers and those that produce specialty or value-added crops are more likely to focus on a particular niche market. Lastly, the use of the Internet as part of the farming operation does not influence the probability of engaging in any particular business strategy. It is apparent that the government farm program has contributed to a strategic where few producers have an explicit or implicit farm business strategy beyond “"working the program”" and acting as price takers. Or if a strategic choice is apparent, it rests primarily with cost leadership.

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    File URL: http://purl.umn.edu/19618
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    Bibliographic Info

    Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2002 Annual meeting, July 28-31, Long Beach, CA with number 19618.

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    Date of creation: 2002
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    Handle: RePEc:ags:aaea02:19618

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    Keywords: Farm Management;

    References

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    1. Tweeten, Luther G. & Amponsah, William A., 1996. "Alternatives For Small Farm Survival: Government Policies Versus The Free Market," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 28(01), July.
    2. Brester, Gary W. & Penn, J.B., 1999. "Strategic Business Management Principles For The Agricultural Production Sector In A Changing Global Food System," Trade Research Center Policy Issues Papers 29161, Montana State University, Department of Agricultural Economics and Economics.
    3. Thompson, Shelley J. & Hayenga, Marvin L. & Hayes, Dermot J., 2000. "E-Agribusiness," Staff General Research Papers 1850, Iowa State University, Department of Economics.
    4. Gloy, Brent A. & Akridge, Jay T., 1999. "Segmenting The Commercial Producer Market For Agricultural Inputs," 1999 Annual meeting, August 8-11, Nashville, TN 21592, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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    Cited by:
    1. Streeter, Deborah H. & Bills, Nelson L., 2003. "Value-Added Ag-Based Economic Development: A Panacea or False Promise? Part One of a Two-Part Companion Series: What is Value-Added and How Do We Study It?," Working Papers 127189, Cornell University, Department of Applied Economics and Management.

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