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Determinants of Financial Performance of Commercial Dairy Farms

Author

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  • Johnson, James D.
  • El-Osta, Hisham S.

Abstract

Data from the 1993 Farm Costs and Returns Survey were used in a multi-variate analysis framework to determine factors associated with the financial performance of commercial dairy farm operations. Statistical equivalency tests revealed regional differences in the way extensive indebtedness, size of operation, and labor cost affect net farm incomes. Regional differences were also found in terms of how milk production per cow, per-unit cost of purchased feed, and level of adoption of capital intensive technologies affect per-unit returns. Examination of the variation in the net farm income of commercial dairy farms using the method of coefficients of separate determination identified the size of the operation, regardless of the location of the farm business, as the factor contributing the most to the variability in net farm income. On a per-unit-of-returns basis, factors found most important in explaining the variation in net returns per hundredweight of milk sold were cow's productivity, and per-cow forage production and purchased feed costs.

Suggested Citation

  • Johnson, James D. & El-Osta, Hisham S., 1998. "Determinants of Financial Performance of Commercial Dairy Farms," Technical Bulletins 33561, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uerstb:33561
    DOI: 10.22004/ag.econ.33561
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    Cited by:

    1. Lajos Barath & Raushan Bokusheva & Imre Ferto, 2016. "Studying Farm Insurance Demand under Financial Constraints," CERS-IE WORKING PAPERS 1625, Institute of Economics, Centre for Economic and Regional Studies.
    2. Ashok Kumar Mishra & Krishna Paudel, 2011. "Estimating permanent income and wealth of the US farm households," Applied Economics, Taylor & Francis Journals, vol. 43(12), pages 1521-1533.
    3. Hisham S. El‐Osta & Ashok K. Mishra & Mitchell J. Morehart, 2007. "Determinants of economic well‐being among U.S. farm operator households," Agricultural Economics, International Association of Agricultural Economists, vol. 36(3), pages 291-304, May.
    4. Oliver Musshoff & Norbert Hirschauer, 2011. "A behavioral economic analysis of bounded rationality in farm financing decisions," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 71(1), pages 62-83, May.
    5. 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 Limited, vol. 71(1), pages 41-61, May.
    6. Gloy, Brent A. & Hyde, Jeffrey & LaDue, Eddy L., 2002. "Dairy Farm Management and Long-Term Farm Financial Performance," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 31(2), pages 1-15, October.
    7. Roesch, Andreas, 2015. "Impact of the SO Threshold on the Statistics of Economic Variables for the Swiss Agricultural Sector," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 64(01), March.
    8. Mishra, Ashok K. & Tegegne, Fisseha & Sandretto, Carmen L., 2004. "The Impact of Participation in Cooperatives on the Success of Small Farms," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 22(1), pages 1-18.
    9. McCarthy Jaki & Wagner James & Sanders Herschel Lisette, 2017. "The Impact of Targeted Data Collection on Nonresponse Bias in an Establishment Survey: A Simulation Study of Adaptive Survey Design," Journal of Official Statistics, Sciendo, vol. 33(3), pages 857-871, September.
    10. El-Osta, Hisham S. & Mishra, Ashok K., 2001. "Adoption And Economic Impact Of Site-Specific Technologies In U.S. Agriculture," 2001 Annual meeting, August 5-8, Chicago, IL 20593, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Anjani Kumar & Ashok K. Mishra & Sunil Saroj & Vinay K. Sonkar & Ganesh Thapa & Pramod K. Joshi, 2020. "Food safety measures and food security of smallholder dairy farmers: Empirical evidence from Bihar, India," Agribusiness, John Wiley & Sons, Ltd., vol. 36(3), pages 363-384, June.
    12. Adhikari, Arun & Mishra, Ashok K. & Chintawar, Sachin, 2009. "Adoption of Technology and Its Impact on Profitability of Young and Beginning Farmers: A Quantile Regression Approach," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46830, Southern Agricultural Economics Association.
    13. Sporri, Martina & Baráth, Lajos & Bokusheva, Raushan & Ferto, Imre, 2012. "The Impact of Crop Insurance on the Economic Performance of Hungarian Cropping Farms," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122525, European Association of Agricultural Economists.
    14. Bhuyan, Sanjib & Postel, Michael, 2009. "Determinants of Organic Dairy Farm Profitability: Some Evidence from the Northeast United States," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49934, Agricultural and Applied Economics Association.
    15. Allan P. Bacho & Olga I. Murova, 2017. "Financial Performance Analysis of Corn-based Ethanol Enterprises in the U.S," Business and Economic Research, Macrothink Institute, vol. 7(1), pages 242-260, June.
    16. Hadrich, Joleen C., 2011. "Human capital and its effect on the farm business life cycle," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103481, Agricultural and Applied Economics Association.
    17. McBride, William D. & Johnson, James D., 2004. "Approaches To Management And Farm Business Success," 2004 Annual meeting, August 1-4, Denver, CO 20131, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    18. Short, Sara D., 2003. "Effects Of Low Milk Prices On U.S. Dairy Farms In 2000," 2003 Annual Meeting, February 1-5, 2003, Mobile, Alabama 35213, Southern Agricultural Economics Association.
    19. Khanal, Aditya R. & Gillespie, Jeffrey M., 2011. "Adoption and Profitability of Breeding Technologies on United States Dairy Farms," 2011 Annual Meeting, February 5-8, 2011, Corpus Christi, Texas 98574, Southern Agricultural Economics Association.
    20. Babetskaya, Lyubov, 2001. "Enhancing The Performance Of Risk-Rating Models At Community Banks," 2001 Annual meeting, August 5-8, Chicago, IL 20690, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    21. du Toit, J.P. & Ortmann, Gerald F. & Ramroop, S., 2010. "Factors influencing the long-term competitiveness of commercial milk producers: evidence from panel data in East Griqualand, South Africa," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 49(1), pages 1-22, March.
    22. Foreman, Linda F. & Livezey, Janet S., 2003. "Factors Contributing To Financially Successful Southern Rice Farms," 2003 Annual Meeting, February 1-5, 2003, Mobile, Alabama 35215, Southern Agricultural Economics Association.

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