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Profit Patterns Across American Agriculture

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  • Blank, Steven C.
  • Erickson, Kenneth W.
  • Moss, Charles B.

Abstract

To remain viable, agriculture in each location must offer returns that are competitive with those from alternative investments and sufficient to cover producers' financial obligations. Economic theory says that rates of return converge over time as resources flow into more-profitable industries and out of less-profitable industries, causing factor price changes. Both traditional growth and trade theories say factor markets will adjust to equalize commodity returns over time. This study examines spatial relationships in agriculture's profitability over time. Results show temporal and spatial convergence of returns consistent with trade and development theories. However, there are profit patterns unique to state/regional agriculture, raising policy implications.

Suggested Citation

  • Blank, Steven C. & Erickson, Kenneth W. & Moss, Charles B., 2005. "Profit Patterns Across American Agriculture," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 30(2), pages 1-26, August.
    • Handle: RePEc:ags:jlaare:31212
    DOI: 10.22004/ag.econ.31212
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    File URL: https://ageconsearch.umn.edu/record/31212/files/30020205.pdf
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    References listed on IDEAS

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    1. El-Osta, Hisham S. & Ahearn, Mary Clare, 1996. "Estimating the Opportunity Cost of Unpaid Farm Labor for U.S. Farm Operators," Technical Bulletins 156784, United States Department of Agriculture, Economic Research Service.
    2. van Kooten, G Cornelis & Young, Douglas L & Krautkraemer, Jeffrey A, 1997. "A Safety-First Approach to Dynamic Cropping Decisions," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 24(1), pages 47-63.
    3. Ben-David, Dan, 2001. "Trade liberalization and income convergence: a comment," Journal of International Economics, Elsevier, vol. 55(1), pages 229-234, October.
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    Cited by:

    1. Mishra, Ashok K. & Moss, Charles B. & Erickson, Kenneth W., 2006. "Farm Wealth Inequality Within and Across States in the United States," Agricultural and Resource Economics Review, Cambridge University Press, vol. 35(2), pages 251-264, October.
    2. Blank, Steven C. & Erickson, Kenneth W. & Nehring, Richard & Hallahan, Charles, 2006. "Agricultural Profits and Farm Household Wealth: A Farm-level and Cross-sectional Analysis," 2006 Annual meeting, July 23-26, Long Beach, CA 271503, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Brorsen, B. Wade, 2009. "Research: Are We Valuing the Right Stuff?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(1), pages 1-10, April.

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