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Do the Largest Firms Grow and Diversify the Fastest? The Case of U.S. Dairies

Author

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

    (School of Economic Sciences, Washington State University)

Abstract

We analyze growth and diversification of U.S. dairy farms by examining changes in ten size cohorts and new entrants through three successive censuses. We reject Gibrat’s law and the mean reversion hypothesis of growth. Growth rates appear bimodal where the smallest and largest farm cohorts grow fastest. All cohorts diversify but the largest farms do not diversify as rapidly as medium-sized farms. New entrants are generally large, and they diversify more rapidly than comparably-sized incumbents. These data suggest that scale economies persist even for the largest cohort of U.S. dairy farms and scale economies dominate scope economies for large farms.

Suggested Citation

  • Almuhanad Melhim & Erik J. O'Donoghue & C. Richard Shumway, 2008. "Do the Largest Firms Grow and Diversify the Fastest? The Case of U.S. Dairies," Working Papers 2008-7, School of Economic Sciences, Washington State University.
    • Handle: RePEc:wsu:wpaper:shumway-5
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    References listed on IDEAS

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    12. Skolrud, Tristan D. & O'Donoghue, Erik J. & Shumway, C. Richard & Melhim, Almuhanad, 2007. "Farm Growth, Consolidation, and Diversification: Washington Dairy Industry," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 22(2), pages 1-4.
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    Cited by:

    1. Höhler, Julia & Kuhl, Rainer, 2014. "Corporations in an evolving competitive environment - evidence for the German agribusiness," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182689, European Association of Agricultural Economists.
    2. Heath Henderson & Leonardo Corral & Eric Simning & Paul Winters, 2015. "Land Accumulation Dynamics in Developing Country Agriculture," Journal of Development Studies, Taylor & Francis Journals, vol. 51(6), pages 743-761, June.
    3. Zimmermann, Andrea & Heckelei, Thomas, 2012. "Differences of farm structural change across European regions," Discussion Papers 162879, University of Bonn, Institute for Food and Resource Economics.
    4. Heath Henderson & Leonardo Corral & Eric Simning & Paul Winters, 2015. "Land Accumulation Dynamics in Developing Country Agriculture," Journal of Development Studies, Taylor & Francis Journals, vol. 51(6), pages 743-761, June.
    5. Höhler, Julia & Kühl, Rainer, 2016. "Do Growth Rates Depend on the Initial Firm Size? Evidence for the German Agribusiness," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 65(04), December.
    6. Rajsic, Predrag, 2013. "Cost Structure of the Ontario Dairy Industry Revisited: Distributional Aspects," Working Papers 157407, Canadian Agricultural Trade Policy Research Network.
    7. Nehring, Richard F. & Sauer, Johannes & Gillespie, Jeffrey M. & Hallahan, Charles B., 2011. "Intensive versus Extensive Dairy Production Systems: Dairy States in the Eastern and Midwestern U.S. and Key Pasture Countries the E.U.: Determining the Competitive Edge," 2011 Annual Meeting, February 5-8, 2011, Corpus Christi, Texas 98824, Southern Agricultural Economics Association.
    8. Sherzod B. Akhundjanov & Tatiana Drugova, 2022. "On the growth process of US agricultural land," Empirical Economics, Springer, vol. 63(3), pages 1727-1740, September.

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    More about this item

    Keywords

    : census; dairy; diversification; growth; scale; scope;
    All these keywords.

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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