IDEAS home Printed from https://ideas.repec.org/p/isu/genstf/2003010108000018194.html
   My bibliography  Save this paper

An economic perspective on Iowa farm diversification in the twentieth century

Author

Listed:
  • Miller, Matthew Edward

Abstract

The thesis examines farm-level diversification in Iowa over the past century. Economic theory is employed to propose explanations for observed trends in diversification. The hypothesis says that agricultural production technology has been the driving force behind the emergence of large, highly specialized farms in Iowa. Applications from portfolio theory, the theory of the farm, and agronomics are also utilized to flesh out the theory section. Two indexes, entropy and the Hirschman-Herfindahl index, are constructed using production and price data from the Census of Agriculture. The indices show diversification as relatively constant from 1885 to 1930, after which, a strong specialization trend is evident through 1997 (the extent of the data). Case studies on hybrid corn production, mechanization, soybeans, and the industrialization of livestock are conducted to supplement the indices. An econometric test, the Granger test of causality, is carried out to test for a causal link running from technology to diversification. Public spending on agricultural production technology is used as a proxy for technology, while the index data is used for diversification. Finally, the conclusion gives suggestions for future research and offers thoughts on the future of Iowa farm diversification.

Suggested Citation

  • Miller, Matthew Edward, 2003. "An economic perspective on Iowa farm diversification in the twentieth century," ISU General Staff Papers 2003010108000018194, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:2003010108000018194
    as

    Download full text from publisher

    File URL: https://dr.lib.iastate.edu/server/api/core/bitstreams/5545f14e-f4b5-4d9e-99ca-2d48e86f7826/content
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. S. R. Johnson, 1967. "A Re-examination of the Farm Diversification Problem," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 49(3), pages 610-621.
    2. Elwin G. Smith & Douglas L. Young, 2003. "Cropping Diversity along the U.S.-Canada Border," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 25(1), pages 154-167.
    3. Lew, Byron, 2000. "The Diffusion of Tractors on the Canadian Prairies: The Threshold Model and the Problem of Uncertainty," Explorations in Economic History, Elsevier, vol. 37(2), pages 189-216, April.
    4. Allen, Douglas W & Lueck, Dean, 1998. "The Nature of the Farm," Journal of Law and Economics, University of Chicago Press, vol. 41(2), pages 343-386, October.
    5. Radoje Nikolitch, 1969. "Family-Operated Farms: Their Compatibility with Technological Advance," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 51(3), pages 530-545.
    6. Berk, Jonathan B., 1997. "Necessary Conditions for the CAPM," Journal of Economic Theory, Elsevier, vol. 73(1), pages 245-257, March.
    7. Naldi, M., 2003. "Concentration indices and Zipf's law," Economics Letters, Elsevier, vol. 78(3), pages 329-334, March.
    8. J. Tobin, 1958. "Liquidity Preference as Behavior Towards Risk," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 25(2), pages 65-86.
    9. John G. Stovall, 1966. "Income Variation and Selection of Enterprises," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 48(5), pages 1575-1579.
    10. Earl O. Heady, 1952. "Diversification in Resource Allocation and Minimization of Income Variability," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 34(4), pages 482-496.
    11. Calum Greig Turvey & H. C. Driver, 1987. "Systematic and Nonsystematic Risks in Agriculture," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 35(2), pages 387-401, July.
    12. Zheng, Buhong & J. Cushing, Brian, 2001. "Statistical inference for testing inequality indices with dependent samples," Journal of Econometrics, Elsevier, vol. 101(2), pages 315-335, April.
    13. Allen, Douglas W & Lueck, Dean, 1992. "The "Back Forty" on a Handshake: Specific Assets, Reputation, and the Structure of Farmland Contracts," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 8(2), pages 366-376, April.
    14. Walter R. Butcher & Norman K. Whittlesey, 1966. "Trends and Problems in Growth of Farm Size," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 48(5), pages 1513-1519.
    15. Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, vol. 7(1), pages 77-91, March.
    16. Allen, Douglas W & Lueck, Dean, 1995. "Risk Preferences and the Economics of Contracts," American Economic Review, American Economic Association, vol. 85(2), pages 447-451, May.
    17. Allen, Douglas W & Lueck, Dean, 1999. "The Role of Risk in Contract Choice," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(3), pages 704-736, October.
    18. M. Rose Olfert, 1992. "Nonfarm, Employment as a Response to Underemployment in Agriculture," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 40(3), pages 443-458, November.
    19. William F. Sharpe, 1964. "Capital Asset Prices: A Theory Of Market Equilibrium Under Conditions Of Risk," Journal of Finance, American Finance Association, vol. 19(3), pages 425-442, September.
    20. Rulon D. Pope & Richard Prescott, 1980. "Diversification in Relation to Farm Size and Other Socioeconomic Characteristics," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(3), pages 554-559.
    21. Schmitt, Gunther, 1991. "Why Is the Agriculture of Advanced Western Economies Still Organized by Family Farms? Will This Continue to Be So in the Future?," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 18(3-4), pages 443-458.
    22. Nelson, Charles R, 1979. "Granger Causality and the Natural Rate Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 87(2), pages 390-394, April.
    23. Douglas W. Allen & Dean Lueck, 2000. "A Transaction Cost Primer on Farm Organization," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 48(4), pages 643-652, December.
    24. Samuelson, Paul A., 1967. "General Proof that Diversification Pays*," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 2(1), pages 1-13, March.
    25. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    26. Philip M. Raup, 1969. "Economies and Diseconomies of Large-Scale Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 51(5), pages 1274-1283.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Keith Vorkink & Douglas J. Hodgson & Oliver Linton, 2002. "Testing the capital asset pricing model efficiently under elliptical symmetry: a semiparametric approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 17(6), pages 617-639.
    2. Lean, Hooi Hooi & McAleer, Michael & Wong, Wing-Keung, 2010. "Market efficiency of oil spot and futures: A mean-variance and stochastic dominance approach," Energy Economics, Elsevier, vol. 32(5), pages 979-986, September.
    3. David S. Jones & V. Vance Roley, 1981. "Bliss Points in Mean-Variance Portfolio Models," NBER Technical Working Papers 0019, National Bureau of Economic Research, Inc.
    4. Hooi Hooi Lean & Michael McAleer & Wing-Keung Wong, 2010. "Market Efficiency of Oil Spot and Futures: A Stochastic Dominance Approach," CIRJE F-Series CIRJE-F-705, CIRJE, Faculty of Economics, University of Tokyo.
    5. Bravo-Ureta, Boris E. & Cocchi, Horacio & Solís, Daniel, 2006. "Output Diversification among Small-Scale Hillside Farmers in El Salvador," IDB Publications (Working Papers) 3012, Inter-American Development Bank.
    6. Erik J. O’Donoghue & Michael J. Roberts & Nigel Key, 2009. "Did the Federal Crop Insurance Reform Act Alter Farm Enterprise Diversification?," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(1), pages 80-104, February.
    7. Mumey, G.A. & Bauer, L. & Boyda, A., 1988. "An Estimate of Risk and Returns From Cropping Alternatives," Project Report Series 232065, University of Alberta, Department of Resource Economics and Environmental Sociology.
    8. Antonio Díaz & Carlos Esparcia, 2021. "Dynamic optimal portfolio choice under time-varying risk aversion," International Economics, CEPII research center, issue 166, pages 1-22.
    9. A. El-Gamal, Mahmoud, 2001. "An Economic Explication of the Prohibition of Gharar in Classical Islamic Jurisprudence," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 8, pages 29-58.
    10. O'Donoghue, Erik J. & Key, Nigel D. & Roberts, Michael J., 2005. "Does risk matter for farm businesses? The effect of crop insurance on production and diversification," 2005 Annual meeting, July 24-27, Providence, RI 19397, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Jun Yeong Lee & Grant Durbahn & Peter F. Orazem & Wendong Zhang, 2023. "The roles of risk preferences, selection, and uncertain returns on land contracts," Agricultural Economics, International Association of Agricultural Economists, vol. 54(2), pages 220-233, March.
    12. Khan, M. Ali, 2000. "Globalization Of Financial Markets And Islamic Financial Institutions," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 8, pages 20-66.
    13. Egozcue, Martin & Wong, Wing-Keung, 2010. "Gains from diversification on convex combinations: A majorization and stochastic dominance approach," European Journal of Operational Research, Elsevier, vol. 200(3), pages 893-900, February.
    14. Bick, Avi, 2004. "The mathematics of the portfolio frontier: a geometry-based approach," The Quarterly Review of Economics and Finance, Elsevier, vol. 44(2), pages 337-361, May.
    15. Hany Shawky & Ronald Forbes & Alan Frankle, 1983. "Liquidity Services and Capital Market Equilibrium: The Case for Money Market Mutual Funds," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 6(2), pages 141-152, June.
    16. Babalos, Vassilios & Caporale, Guglielmo Maria & Philippas, Nikolaos, 2012. "Efficiency evaluation of Greek equity funds," Research in International Business and Finance, Elsevier, vol. 26(2), pages 317-333.
    17. Monda, Barbara & Giorgino, Marco & Modolin, Ileana, 2013. "Rationales for Corporate Risk Management - A Critical Literature Review," MPRA Paper 45420, University Library of Munich, Germany.
    18. Lu, Xiaomeng & Guo, Jiaojiao & Gan, Li, 2020. "International comparison of household asset allocation: Micro-evidence from cross-country comparisons," Emerging Markets Review, Elsevier, vol. 43(C).
    19. Paul Munene Muiruri, 2014. "Effects of Estimating Systematic Risk in Equity Stocks in the Nairobi Securities Exchange (NSE) (An Empirical Review of Systematic Risks Estimation)," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 4(4), pages 228-248, October.
    20. Wong, Wing-Keung & Phoon, Kok Fai & Lean, Hooi Hooi, 2008. "Stochastic dominance analysis of Asian hedge funds," Pacific-Basin Finance Journal, Elsevier, vol. 16(3), pages 204-223, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:isu:genstf:2003010108000018194. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Curtis Balmer (email available below). General contact details of provider: https://edirc.repec.org/data/deiasus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.