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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 Gloy 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, vol. 69(2), pages 160-179, July.
  • Handle: RePEc:eme:afrpps:v:69:y:2009:i:2:p:160-179
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    Citations

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    Cited by:

    1. Hartarska, Valentina M. & Nadolnyak, Denis A., 2012. "Financing Constraints and Access to Credit in Post Crisis Environment: Evidence from New Farmers in Alabama," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124882, Agricultural and Applied Economics Association.
    2. Joshua D. Detre & Hiroki Uematsu & Ashok K. Mishra, 2011. "The influence of GM crop adoption on the profitability of farms operated by young and beginning farmers," Agricultural Finance Review, Emerald Group Publishing, vol. 71(1), pages 41-61, May.
    3. Bruce L. Ahrendsen & Ani L. Katchova, 2012. "Financial ratio analysis using ARMS data," Agricultural Finance Review, Emerald Group Publishing, vol. 72(2), pages 262-272, July.
    4. Paulson, Nicholas, 2013. "The Impact of Revenues and Costs on the Relative Returns of Illinois Grain Farms," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers.
    5. McDonald, Roberta & Karina, Pierce & Reamonn, Fealy & Horan, Brendan, 2013. "Characteristics, intentions and expectations of new entrant dairy farmers entering the Irish dairy industry through the New Entrant Scheme," International Journal of Agricultural Management, Institute of Agricultural Management;International Farm Management Association, vol. 2(4), July.
    6. Menefee, Seth & Doye, Damona G., 2013. "Barriers to Entry for Young and Beginning Cattle Producers In Oklahoma," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida 143048, Southern Agricultural Economics Association.
    7. Hartarska, Valentina M. & Nadolnyak, Denis A., 2012. "Financing Constraints and Access to Credit in Post Crisis Environment: Evidence from New Farmers in Alabama," 2012 Annual Meeting, February 4-7, 2012, Birmingham, Alabama 119799, Southern Agricultural Economics Association.
    8. Jaclyn D. Kropp & Ani L. Katchova, 2011. "The effects of direct payments on liquidity and repayment capacity of beginning farmers," Agricultural Finance Review, Emerald Group Publishing, vol. 71(3), pages 347-365, November.
    9. Oliver Musshoff & Norbert Hirschauer, 2011. "A behavioral economic analysis of bounded rationality in farm financing decisions: First empirical evidence," Agricultural Finance Review, Emerald Group Publishing, vol. 71(1), pages 62-83, May.
    10. Goeringer, L. Paul & Goodwin, Harold L., Jr. & Dixon, Bruce L. & Popp, Michael P., 2012. "Envesting in an Agricultural Legacy: Impact of a Targeted Young and Beginning Farmer Loan Program in Arkansas," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124427, Agricultural and Applied Economics Association.
    11. Goeringer, L. Paul & Goodwin, Harold L., Jr. & Dixon, Bruce L. & Popp, Michael P., 2013. "EnVesting in an Agricultural Legacy: Design and Implementation of a Targeted Young and Beginning Farmer Loan Program in Arkansas," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida 143037, Southern Agricultural Economics Association.

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