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Determinants of Financial Performance of Commercial Dairy Farms

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  • Johnson, James D.
  • El-Osta, Hisham S.
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    Abstract

    Data from the 1993 Farm Costs and Returns Survey were used in a multi-variate analysis framework to determine factors associated with the financial performance of commercial dairy farm operations. Statistical equivalency tests revealed regional differences in the way extensive indebtedness, size of operation, and labor cost affect net farm incomes. Regional differences were also found in terms of how milk production per cow, per-unit cost of purchased feed, and level of adoption of capital intensive technologies affect per-unit returns. Examination of the variation in the net farm income of commercial dairy farms using the method of coefficients of separate determination identified the size of the operation, regardless of the location of the farm business, as the factor contributing the most to the variability in net farm income. On a per-unit-of-returns basis, factors found most important in explaining the variation in net returns per hundredweight of milk sold were cow's productivity, and per-cow forage production and purchased feed costs.

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    Bibliographic Info

    Paper provided by United States Department of Agriculture, Economic Research Service in its series Technical Bulletins with number 33561.

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    Date of creation: 1998
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    Handle: RePEc:ags:uerstb:33561

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    Related research

    Keywords: financial performance; net farm income; technological adoption; Lorenz curve; Gini coefficient; Agricultural Finance; Livestock Production/Industries;

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    Cited by:
    1. Bhuyan, Sanjib & Postel, Michael, 2009. "Determinants of Organic Dairy Farm Profitability: Some Evidence from the Northeast United States," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49934, Agricultural and Applied Economics Association.
    2. Adhikari, Arun & Mishra, Ashok K. & Chintawar, Sachin, 2009. "Adoption of Technology and Its Impact on Profitability of Young and Beginning Farmers: A Quantile Regression Approach," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46830, Southern Agricultural Economics Association.
    3. Foreman, Linda F. & Livezey, Janet S., 2003. "Factors Contributing To Financially Successful Southern Rice Farms," 2003 Annual Meeting, February 1-5, 2003, Mobile, Alabama 35215, Southern Agricultural Economics Association.
    4. Joshua D. Detre & Hiroki Uematsu & Ashok K. Mishra, 2011. "The influence of GM crop adoption on the profitability of farms operated by young and beginning farmers," Agricultural Finance Review, Emerald Group Publishing, vol. 71(1), pages 41-61, May.
    5. McBride, William D. & Johnson, James D., 2004. "Approaches To Management And Farm Business Success," 2004 Annual meeting, August 1-4, Denver, CO 20131, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. El-Osta, Hisham S. & Mishra, Ashok K., 2001. "Adoption And Economic Impact Of Site-Specific Technologies In U.S. Agriculture," 2001 Annual meeting, August 5-8, Chicago, IL 20593, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Babetskaya, Lyubov, 2001. "Enhancing The Performance Of Risk-Rating Models At Community Banks," 2001 Annual meeting, August 5-8, Chicago, IL 20690, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Oliver Musshoff & Norbert Hirschauer, 2011. "A behavioral economic analysis of bounded rationality in farm financing decisions: First empirical evidence," Agricultural Finance Review, Emerald Group Publishing, vol. 71(1), pages 62-83, May.
    9. Short, Sara D., 2003. "Effects Of Low Milk Prices On U.S. Dairy Farms In 2000," 2003 Annual Meeting, February 1-5, 2003, Mobile, Alabama 35213, Southern Agricultural Economics Association.

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