What does Initial Farm Size Imply About Growth and Diversification?
AbstractRecent 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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Bibliographic InfoPaper provided by School of Economic Sciences, Washington State University in its series Working Papers with number 2008-5.
Length: 32 pages
Date of creation: Apr 2008
Date of revision:
firm growth; diversification; scale economies; scope economies; Gibrat’s law; longitudinal data;
Other versions of this item:
- Melhim, Almuhanad & O'Donoghue, Erik J. & Shumway, C. Richard, 2009. "What Does Initial Farm Size Imply About Growth and Diversification?," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 41(01), April.
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
This paper has been announced in the following NEP Reports:
- NEP-AGR-2009-01-03 (Agricultural Economics)
- NEP-ALL-2009-01-03 (All new papers)
- NEP-CSE-2009-01-03 (Economics of Strategic Management)
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