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Participation in the Conservation Reserve Program and Off-Farm Work: Implications for Farm and Farm Household Productivity

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  • Chang, Hung-Hao
  • Boisvert, Richard N.

Abstract

Using a national survey of U.S farm households, we investigate the interrelationship between participation in the Conservation Reserve Program (CRP) and the decision to work off the farm. We go on examine the effects of these two decisions on farm and farm household efficiency and productivity by estimating stochastic frontier productions for farm output and multiple output-orientated distance functions that consider income from agricultural sales, the CRP and off-farm work as outputs of the farm household. We control for the effects of self selection in estimating both the frontier production and distance functions. It appears that operators'’ decisions to work off the farm have led to significant improvements in household resource allocation between farm and other productive activities by farm households -- leading to high technical efficiency for both farm and farm household activities. In contract, participation in the CRP alone leads to the reduction of the technical efficiency and productivity on farm as well as on combined household activities.

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Bibliographic Info

Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2006 Annual meeting, July 23-26, Long Beach, CA with number 21147.

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Date of creation: 2006
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Handle: RePEc:ags:aaea06:21147

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Keywords: Farm Management;

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  1. Paul, Catherine J. Morrison & Nehring, Richard, 2005. "Product diversification, production systems, and economic performance in U.S. agricultural production," Journal of Econometrics, Elsevier, vol. 126(2), pages 525-548, June.
  2. Tim Coelli & Sergio Perelman, 2000. "Technical efficiency of European railways: a distance function approach," Applied Economics, Taylor & Francis Journals, vol. 32(15), pages 1967-1976.
  3. Hennessy, David A., 1998. "The Production Effects of Agricultural Income Support Policies Under Uncertainty," Staff General Research Papers 1207, Iowa State University, Department of Economics.
  4. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
  5. Richard Nehring & Jorge Fernandez-Cornejo & David Banker, 2005. "Off-farm labour and the structure of US agriculture: the case of corn/soybean farms," Applied Economics, Taylor & Francis Journals, vol. 37(6), pages 633-649.
  6. Jean-Paul Chavas & Ragan Petrie & Michael Roth, 2005. "Farm Household Production Efficiency: Evidence from The Gambia," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(1), pages 160-179.
  7. Barry K. Goodwin & Ashok K. Mishra, 2004. "Farming Efficiency and the Determinants of Multiple Job Holding by Farm Operators," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(3), pages 722-729.
  8. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
  9. Lee, Lung-Fei, 1978. "Unionism and Wage Rates: A Simultaneous Equations Model with Qualitative and Limited Dependent Variables," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(2), pages 415-33, June.
  10. Awudu Abdulai & Christopher L. Delgado, 1999. "Determinants of Nonfarm Earnings of Farm-Based Husbands and Wives in Northern Ghana," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 117-130.
  11. Duke, Joshua M., 2004. "Participation in Agricultural Land Preservation Programs: Parcel Quality and a Complex Policy Environment," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 33(1), April.
  12. Mei-Ying Huang & Cliff Huang & Tsu-Tan Fu, 2002. "Cultivation Arrangements and the Cost Efficiency of Rice Farming in Taiwan," Journal of Productivity Analysis, Springer, vol. 18(3), pages 223-239, November.
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