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Machinery Investment Decisions: A Simulated Analysis For Cash Grain Farms

Author

Listed:
  • Gustafson, Cole R.
  • Barry, Peter J.
  • Sonka, Steven T.

Abstract

A combination of experimental and simulation procedures identify important factors in an Illinois cash grain farmer's machinery investment decisions. In an experiment setting, a panel of farmers based investment decisions on their own expectations, farm situations, and varying policy scenarios. In general, the results show investment levels statistically related to the tenure and leverage of operators, the economic conditions they faced, and the age of existing machinery. Alternative public policies of lower commodity price supports, tax reform, and interest rate subsidies influenced the timing of purchases but did not alter total investment amounts.

Suggested Citation

  • Gustafson, Cole R. & Barry, Peter J. & Sonka, Steven T., 1988. "Machinery Investment Decisions: A Simulated Analysis For Cash Grain Farms," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 13(2), pages 1-10, December.
    • Handle: RePEc:ags:wjagec:32105
    DOI: 10.22004/ag.econ.32105
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    References listed on IDEAS

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    1. S. T. Sonka & B. L. Dixon & B. L. Jones, 1980. "Impact of Farm Financial Structure on the Credit Reserve of the Farm Business," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(3), pages 565-570.
    2. Marvin T. Batte & Steven T. Sonka, 1985. "Before- and After-Tax Size Economies: An Example for Cash Grain Production in Illinois," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(3), pages 600-608.
    3. repec:ags:agsaem:288652 is not listed on IDEAS
    4. John B. Penson & Robert F. J. Romain & Dean W. Hughes, 1981. "Net Investment in Farm Tractors: An Econometric Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 63(4), pages 629-635.
    5. Simon, Herbert A., 1984. "On the behavioral and rational foundations of economic dynamics," Journal of Economic Behavior & Organization, Elsevier, vol. 5(1), pages 35-55, March.
    6. Anderson, Jock R. & Dillon, John L. & Hardaker, Brian, 1977. "Agricultural Decision Analysis," Monographs: Applied Economics, AgEcon Search, number 288652.
    7. A. J. Rayner & Keith Cowling, 1968. "Demand for Farm Tractors in the United States and the United Kingdom," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 50(4), pages 896-912.
    8. Hrubovcak, James & LeBlanc, Michael, 1985. "Tax Policy and Agricultural Investment," Technical Bulletins 157673, United States Department of Agriculture, Economic Research Service.
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    Citations

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    Cited by:

    1. LeBlanc, Michael & Hrubovcak, James & Durst, Ron L. & Conway, Roger K., 1992. "Farm Machinery Investment And The Tax Reform Act Of 1986," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 17(01), pages 1-14, July.
    2. Shockley, Jordan M. & Osborne, William A. & Dillon, Carl R. & Pierce, Jerry S., 2016. "A Two-Tiered Benchmarking Analysis for Cost Management," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2016.
    3. Cole R. Gustafson & Peter J. Barry & Steven T. Sonka, 1990. "Utilizing expectations to measure economic depreciation and capital gains of farm machinery," Agribusiness, John Wiley & Sons, Ltd., vol. 6(5), pages 489-503.
    4. Hadrich, Joleen C. & Larsen, Ryan A. & Olson, Frayne E., 2012. "Incentives for Machinery Investment," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124897, Agricultural and Applied Economics Association.
    5. repec:ags:aesdoc:235179 is not listed on IDEAS
    6. Lajili, Kaouthar & Barry, Peter J. & Sonka, Steven T. & Mahoney, Joseph T., 1997. "Farmers' Preferences For Crop Contracts," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 22(2), pages 1-17, December.
    7. Micheels, Eric T. & Katchova, Ani L. & Barry, Peter J., 2004. "Machinery Investment in Illinois: A Study Examining Existing Investment Motivations," 2004 Annual meeting, August 1-4, Denver, CO 20374, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Gustafson, Cole R., 1989. "Stochastic Dynamic Modeling: An Aid To Agricultural Lender Decision Making," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 14(01), pages 1-9, July.
    9. Shockley, Jordan M. & Osborne, William A. & Dillon, Carl R. & Pierce, Jerry S., 2016. "A Two-Tiered Benchmarking Analysis for Cost Management," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2015, pages 1-14.
    10. Hart, Chad Edward, 1999. "Examining agricultural investment," ISU General Staff Papers 1999010108000013567, Iowa State University, Department of Economics.

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