IDEAS home Printed from https://ideas.repec.org/a/eme/afrpps/v69y2009i2p160-179.html
   My bibliography  Save this article

Factors affecting financial performance of new and beginning farmers

Author

Listed:
  • Ashok Mishra
  • Christine Wilson
  • Robert Williams

Abstract

Purpose - The purpose of this paper is to investigate the factors (farm, operator and household characteristics, along with farm type and regional location of the farm) affecting financial performance of new and beginning farmers and ranchers. Design/methodology/approach - Returns on assets (ROA), a measure of financial performance widely used in the farm management literature, is the ratio of net farm income plus interest payment to total assets. This measure has been used by Gloy and LaDue and Gloyet al.to measure financial performance of farmers in New York. ROA is hypothesized to be a function of operator/farm characteristics and management strategies used to manage the farm. The independent variables hypothesized to affect the farm's financial performance encompass the following three areas: farm operator characteristics, farm characteristics such as production and marketing efficiency measures, and management strategies. All standard errors were adjusted for heteroscedasticity using the Huber–White sandwich robust variance estimator based on algorithms contained in STATA. Findings - Results from this study show that although there is an inverted U‐shaped relationship between age of the operator and financial performance, management strategies such as increasing the number of decision makers, engaging in value‐added farming, and having a written business plan can lead to higher financial performance. Originality/value - More than 50 percent of current farmers are likely to retire in the next five years. US farmers over age 55 control more than half the farmland, while the number of new farmers replacing them has fallen since the Farm Crisis period, 1982‐1987. Paralleling this shift in production, agriculture is in a decline in overall farm numbers. Concern in many states arises because the loss adversely affects the future of family farms, the farm economy and healthy rural communities. Additionally, the rapid decline in the entry of new and young farmers is an indication of rising barriers to entry, resulting in calls from within the farming community for public policy measures designed to aid new and beginning farmers.

Suggested Citation

  • Ashok Mishra & Christine Wilson & Robert Williams, 2009. "Factors affecting financial performance of new and beginning farmers," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 69(2), pages 160-179, July.
  • Handle: RePEc:eme:afrpps:v:69:y:2009:i:2:p:160-179
    DOI: 10.1108/00021460910978661
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/00021460910978661/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://www.emerald.com/insight/content/doi/10.1108/00021460910978661/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://libkey.io/10.1108/00021460910978661?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    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:eme:afrpps:v:69:y:2009:i:2:p:160-179. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Emerald Support (email available below). General contact details of provider: .

    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.