IDEAS home Printed from https://ideas.repec.org/a/ags/joaaec/43738.html
   My bibliography  Save this article

The Impacts of Farm Financial Structure on Production Efficiency

Author

Listed:
  • Lambert, David K.
  • Bayda, Volodymyr V.

Abstract

Farm financial structure may affect both short- and long-run input usage, thereby affecting farm efficiency. Any inefficiencies arising from the choice of inputs can be magnified over time as credit constraints continue to affect input usage. In a panel of 54 North Dakota crop farms, efficiency and debt structure were related. Intermediate debt was found to be positively related to farm technical efficiency, and short-term debt was negatively associated with technical efficiency. Use of intermediate-term debt was positively associated with farm-scale efficiency, whereas no significant relationship was found between short- and long-term debt and scale efficiency.

Suggested Citation

  • Lambert, David K. & Bayda, Volodymyr V., 2005. "The Impacts of Farm Financial Structure on Production Efficiency," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 37(1), pages 1-13, April.
    • Handle: RePEc:ags:joaaec:43738
    DOI: 10.22004/ag.econ.43738
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/43738/files/277-289.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.43738?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. C. B. Baker, 1968. "Credit in the Production Organization of the Firm," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 50(3), pages 507-520.
    2. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
    3. Kim, Moshe & Maksimovic, Vojislav, 1990. "Debt and Input Misallocation," Journal of Finance, American Finance Association, vol. 45(3), pages 795-816, July.
    4. Barry K. Goodwin & Ashok K. Mishra, 2004. "Farming Efficiency and the Determinants of Multiple Job Holding by Farm Operators," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(3), pages 722-729.
    5. Channing Arndt & Thomas W. Hertel & Paul V. Preckel, 2003. "Bridging the Gap between Partial and Total Factor Productivity Measures Using Directional Distance Functions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 928-942.
    6. Rolf Färe & Shawna Grosskopf & Hyunok Lee, 1990. "A Nonparametric Approach to Expenditure-Constrained Profit Maximization," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(3), pages 574-581.
    7. Chavas, Jean-Paul & Aliber, Michael, 1993. "An Analysis Of Economic Efficiency In Agriculture: A Nonparametric Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 18(1), pages 1-16, July.
    8. Featherstone, Allen M. & Langemeier, Michael R. & Ismet, Mohammad, 1997. "A Nonparametric Analysis of Efficiency for a Sample of Kansas Beef Cow Farms," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 29(1), pages 175-184, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Geraldo Souza & Eliane Gonçalves Gomes & Eliseu Roberto Alves, 2022. "Two-part fractional regression model with conditional FDH responses: an application to Brazilian agriculture," Annals of Operations Research, Springer, vol. 314(2), pages 393-409, July.
    2. Sabasi, Darlington & Kompaniyets, Lyudmyla, 2015. "Impact of credit constraints on profitability and productivity in U.S. agriculture," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205689, Agricultural and Applied Economics Association.
    3. László Szőllősi & Adél Dorottya Erdős, 2023. "Income and Asset Situation of Companies Producing Arable Crops in the Visegrad Countries," Agriculture, MDPI, vol. 13(8), pages 1-20, August.
    4. Minviel, Jean Joseph & Latruffe, Laure, 2014. "Meta-regression analysis of the impact of agricultural subsidies on farm technical efficiency," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182767, European Association of Agricultural Economists.
    5. Stefani, Gianluca & Gadanakis, Yiorgos & Lombardi, Ginevra Virginia & Tiberti, Marco, 2017. "The impact of financial leverage on farms capacity to react in market shocks," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 261156, European Association of Agricultural Economists.
    6. Kuhle Prudence Mnisi & Abdul Latif Alhassan, 2021. "Financial structure and cooperative efficiency: A pecking‐order evidence from sugarcane farmers in Eswatini," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 92(2), pages 261-281, June.
    7. Pieralli, Simone & Hüttel, Silke & Odening, Martin, 2014. "Abandonment of milk production under uncertainty and inefficiency: The case of West German farms," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170236, Agricultural and Applied Economics Association.
    8. West, Steele, 2021. "The Estimation of Farm Business Inefficiency in the Presence of Debt Repayment," 2021 Conference, August 17-31, 2021, Virtual 315048, International Association of Agricultural Economists.
    9. Tiberti, Marco & Stefani, Gianluca & Lombardi, Ginevra, 2016. "Efficiency and Capital Structure in the Italian Cereal Sector," 2016 International European Forum (151st EAAE Seminar), February 15-19, 2016, Innsbruck-Igls, Austria 244539, International European Forum on System Dynamics and Innovation in Food Networks.

    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. Stefani, Gianluca & Gadanakis, Yiorgos & Lombardi, Ginevra Virginia & Tiberti, Marco, 2017. "The impact of financial leverage on farms capacity to react in market shocks," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 261156, European Association of Agricultural Economists.
    2. Gregory, Alexandra & Featherstone, Allen M., 2008. "Nonparametric Efficiency Analysis for Coffee Farms in Puerto Rico," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6765, Southern Agricultural Economics Association.
    3. Kovenock, Dan & Phillips, Gordon M, 1997. "Capital Structure and Product Market Behavior: An Examination of Plant Exit and Investment Decisions," The Review of Financial Studies, Society for Financial Studies, vol. 10(3), pages 767-803.
    4. Berger, Allen N. & Bonaccorsi di Patti, Emilia, 2006. "Capital structure and firm performance: A new approach to testing agency theory and an application to the banking industry," Journal of Banking & Finance, Elsevier, vol. 30(4), pages 1065-1102, April.
    5. Parman, Bryon & Featherstone, Allen & Coffey, Brian, 2015. "Is Efficiency Analysis All There Is With Data Envelopment Analysis," Working Papers 197532, Mississippi State University, Department of Agricultural Economics.
    6. Mugera, Amin W. & Langemeier, Michael R., 2011. "Does Farm Size and Specialization Matter for Productive Efficiency? Results from Kansas," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 43(4), pages 515-528, November.
    7. Stéphane Blancard & Jean-Philippe Boussemart & Walter Briec & Kristiaan Kerstens, 2006. "Short- and Long-Run Credit Constraints in French Agriculture: A Directional Distance Function Framework Using Expenditure-Constrained Profit Functions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 351-364.
    8. Gow, Laura R. & Langemeier, Michael R., 1999. "An Efficiency Analysis Of Cattle Backgrounding In Kansas," 1999 Annual Meeting, July 11-14, 1999, Fargo, ND 35701, Western Agricultural Economics Association.
    9. Rakipova, Anna N. & Gillespie, Jeffrey M. & Franke, Donald E., 2003. "Determinants of Technical Efficiency in Louisiana Beef Cattle Production," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2003, pages 1-9.
    10. Lajara-Camilleri, Natalia & Mateos-Ronco, Alicia, 2012. "Estructura financiera y logro empresarial en cooperativas agrarias: una aproximación empírica," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 12(02).
    11. Stéphane Blancard, 2006. "Financial Exposure and Productive Performance in French Arable Farms," Economics Bulletin, AccessEcon, vol. 4(15), pages 1-9.
    12. Shear, Hannah E. & Pendell, Dustin L. & Nehring, Richard F., 2020. "Assessing Efficiency of U.S. Cow-Calf Operations," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304227, Agricultural and Applied Economics Association.
    13. Ernesto Lopez‐Valeiras & Jacobo Gomez‐Conde & Teresa Fernandez‐Rodriguez, 2016. "Firm Size and Financial Performance: Intermediate Effects of Indebtedness," Agribusiness, John Wiley & Sons, Ltd., vol. 32(4), pages 454-465, November.
    14. Ross, Kara L. & Dalton, Timothy J. & Featherstone, Allen M., 2009. "A Nonparametric Efficiency Analysis of Bean Producers from North and South Kivu," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46575, Southern Agricultural Economics Association.
    15. Blancard, Stéphane & Boussemart, Jean-Philippe & Chavas, Jean-Paul & Leleu, Hervé, 2016. "Potential gains from specialization and diversification further to the reorganization of activities," Omega, Elsevier, vol. 63(C), pages 60-68.
    16. Jin, Man & Zhao, Shunan & Kumbhakar, Subal C., 2019. "Financial constraints and firm productivity: Evidence from Chinese manufacturing," European Journal of Operational Research, Elsevier, vol. 275(3), pages 1139-1156.
    17. Helmers, Glenn A. & Langemeier, Michael R. & Shaik, Saleem, 2005. "Measuring Scope And Scale Efficiency Gains Due To Specialization," 2005 Annual meeting, July 24-27, Providence, RI 19388, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    18. Nivens, Heather D. & Kastens, Terry L. & Dhuyvetter, Kevin C., 2002. "Payoffs to Farm Management: How Important is Crop Marketing?," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 34(1), pages 193-204, April.
    19. Charyulu, D. Kumara, 2010. "Technical, Allocative and Economic Efficiency of Organic Input Units in India," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 65(4), pages 1-17.
    20. Shunxiang Wu & Stephen Devadoss & Yaochi Lu, 2003. "Estimation and decomposition of technical efficiency for sugarbeet farms," Applied Economics, Taylor & Francis Journals, vol. 35(4), pages 471-484.

    More about this item

    Keywords

    Farm Management; Financial Economics; Production Economics;
    All these keywords.

    JEL classification:

    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services

    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:ags:joaaec:43738. 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: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/saeaaea.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.