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The Impacts of Off-Farm Income on Farm Efficiency, Scale, and Profitability Cotton Farms

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  • Nehring, Richard
  • Hallahan, Charlie

Abstract

This paper estimates performance measures on cotton farms, following an input distance stochastic production frontier (SPF) approach and compares the relative performance of farm operator households with and without off-farm wages and salaries. We use 2002 to 2014 USDA data for twelve major cotton producing states-Alabama, Arizona, Arkansas, California, Georgia, Louisiana, Mississippi, Missouri, North Carolina, South Carolina, Tennessee, and Texas-- identifying different performance measures. Previous studies suggest that off-farm work influences economic performance—by “improving” managerial performance. We find that off-farm income boosts scale efficiency on larger operations for the data set analyzed, and is also consistent with significantly higher farm and household returns. We also find that the number of hours worked off-farm by the operator contributes to lower technical efficiency but we find no impact on technical efficiency for hours worked off-farm by the spouse (80 percent of total hours worked off-farm).

Suggested Citation

  • Nehring, Richard & Hallahan, Charlie, 2016. "The Impacts of Off-Farm Income on Farm Efficiency, Scale, and Profitability Cotton Farms," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 230413, Southern Agricultural Economics Association.
    • Handle: RePEc:ags:saea16:230413
    DOI: 10.22004/ag.econ.230413
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    References listed on IDEAS

    as
    1. Vince Breneman, 2006. "Urban Influence on Costs of Production in the Corn Belt," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(4), pages 930-946.
    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. Dorfman, Jeffrey H. & Koop, Gary, 2005. "Current developments in productivity and efficiency measurement," Journal of Econometrics, Elsevier, vol. 126(2), pages 233-240, June.
    4. 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.
    5. Dubman, Robert, 2000. "Variance Estimation With USDA's Farm Costs and Returns Surveys and Agricultural Resource Management Study Surveys," Staff Reports 276685, United States Department of Agriculture, Economic Research Service.
    Full references (including those not matched with items on IDEAS)

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    Keywords

    Consumer/Household Economics; Farm Management; Production Economics;
    All these keywords.

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