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What does Initial Farm Size Imply About Growth and Diversification?

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Author Info

  • Almuhanad Melhim
  • Erik J. O'Donoghue
  • C. Richard Shumway

    ()
    (School of Economic Sciences, Washington State University)

Abstract

Recent consolidation in agriculture has shifted production toward fewer but larger farms, reshaping business relationships between farmers, processors, input suppliers, and local communities. We analyze growth and diversification of U.S. corn, wheat, apple, and beef, farms by examining longitudinal changes in ten size cohorts through three successive censuses. We fail to reject Gibrat’s law in apple and wheat industries and the mean reversion hypothesis in beef and corn industries. Apple and wheat farms diversify over time. Findings suggest that scale economies diminish for large farms across all four industries and scope economies dominate scale economies for large apple and wheat farms.

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File URL: http://faculty.ses.wsu.edu/WorkingPapers/Shumway/FarmSize-jaaerevision.pdf
File Function: First version, 2008
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Bibliographic Info

Paper provided by School of Economic Sciences, Washington State University in its series Working Papers with number 2008-5.

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Length: 32 pages
Date of creation: Apr 2008
Date of revision:
Handle: RePEc:wsu:wpaper:shumway-3

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Related research

Keywords: firm growth; diversification; scale economies; scope economies; Gibrat’s law; longitudinal data;

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Cited by:
  1. Heath Henderson & Leonardo Corral & Eric Simning & Paul Winters, 2014. "Land Accumulation Dynamics in Developing Country Agriculture," IDB Publications 85754, Inter-American Development Bank.

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