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Revealing an Equitable Income Allocation among Dairy Farm Partnerships

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  • Dressler, Jonathan B.
  • Tauer, Loren W.

Abstract

We formulate a method to determine an equitable division of dairy farm partnership income when partners provide unequal amounts of capital, labor, and management and empirically estimate this relationship. New York dairy farm financial data are used within fixed effects and random coefficient panel regression models to reveal a systematic division of dairy farm partnership income among operators’ labor, capital, and management while controlling for heterogeneity arising from differing herd size. Results indicate that controlling for time and heterogeneity across farms due to herd size are important factors when dividing net farm income among unpaid factors of production. Empirical estimates of allocating dairy farm partnership income to equity, operators’ labor, and management are presented.

Suggested Citation

  • Dressler, Jonathan B. & Tauer, Loren W., 2011. "Revealing an Equitable Income Allocation among Dairy Farm Partnerships," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 102116, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea11:102116
    DOI: 10.22004/ag.econ.102116
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    1. Gloy, Brent A. & Hyde, Jeffrey & LaDue, Eddy L., 2002. "Dairy Farm Management and Long-Term Farm Financial Performance," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 31(2), pages 1-15, October.
    2. Swamy, P A V B, 1970. "Efficient Inference in a Random Coefficient Regression Model," Econometrica, Econometric Society, vol. 38(2), pages 311-323, March.
    3. Knoblauch, Wayne A. & Putnam, Linda D. & Karszes, Jason & Anderson, Jessica, 2009. "Business Summary New York State 2008," Research Bulletins 121572, Cornell University, Department of Applied Economics and Management.
    4. Gloy, Brent A. & Hyde, Jeffrey & LaDue, Eddy L., 2002. "Dairy Farm Management and Long-Term Farm Financial Performance," Agricultural and Resource Economics Review, Cambridge University Press, vol. 31(2), pages 233-247, October.
    5. Knoblauch, Wayne A. & Putnam, Linda D., 2008. "Dairy Farm Business Summary, New York Dairy Farm Renters, 2007," EB Series 121812, Cornell University, Department of Applied Economics and Management.
    6. Knoblauch, Wayne A. & Putnam, Linda D., 2009. "Dairy Farm Business Summary, New York Dairy Farm Renters, 2008," EB Series 121775, Cornell University, Department of Applied Economics and Management.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Agricultural Finance; Farm Management;

    JEL classification:

    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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