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What Does Initial Farm Size Imply About Growth and Diversification?

Author

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

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 10 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. The 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.

Suggested Citation

  • 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.
  • Handle: RePEc:ags:joaaec:48757
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    File URL: http://purl.umn.edu/48757
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    Cited by:

    1. Hohler, Julia & Kuhl, Rainer, 2014. "Do Growth Rates Depend On The Initial Firm Size? Evidence For The German Agribusiness," 54th Annual Conference, Goettingen, Germany, September 17-19, 2014 187593, German Association of Agricultural Economists (GEWISOLA).
    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. 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.
    4. 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.

    More about this item

    Keywords

    diversification; firm growth; Gibrat’s law; longitudinal data; scale economies; scope economies; Agribusiness; Farm Management; Production Economics; Q12;

    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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