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Drivers of Profit Inefficiency in Iowa Crop Production

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  • Sawadgo, Wendiam PM
  • Plastina, Alejandro

Abstract

In this paper, we use data envelopment analysis and a panel of Iowa farms to evaluate profit inefficiency in corn and soybean production. We find that farms have, on average, profit inefficiency scores of 89.4% in combined corn and soybean production, suggesting that profit could be increased by 89.4% if farms eliminated technical and allocative inefficiencies. Overall, profit efficiency improved from 2011 to 2018, a period generally characterized by decreasing farm net worth. Moreover, while factors such as farm size and operator age affect technical inefficiency, these variables do not have a significant effect on profit inefficiency, while farms’ net worth per acre and crop insurance indemnity payments positively affect profit inefficiency. Land tenure does not have a significant effect on technical or profit inefficiency.
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Suggested Citation

  • Sawadgo, Wendiam PM & Plastina, Alejandro, 2020. "Drivers of Profit Inefficiency in Iowa Crop Production," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304356, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea20:304356
    DOI: 10.22004/ag.econ.304356
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    References listed on IDEAS

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