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Farm Characteristics That Influence Net Farm Income Variability And Losses

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  • Dunn, Jerry W.
  • Williams, Jeffery R.

Abstract

Farm-level, cross-section and panel data were used with econometric methods to examine relationships between variability in net farm income and explanatory variables including government payments, gross crop income, gross livestock income, costs, efficiency measures, and other socioeconomic characteristics such as age, leverage, percent of land rented, and enterprise diversification. The results suggest that quantifying the impacts of socioeconomic factors on variability of net farm income is difficult. Among the income variables, changes in gross crop income had the largest impact. Among cross-section data, increases in interest costs, age, and diversification were found to have positive relationships with net income variability. However, only the diversification variable was significant when deviations below mean net farm income were used as the measure of risk. Increasing farm size also was found to have a positive relationship with net income variability. When panel data were used and the estimated models included adjustments for time or random effects, the age and diversification variables were insignificant.

Suggested Citation

  • Dunn, Jerry W. & Williams, Jeffery R., 2000. "Farm Characteristics That Influence Net Farm Income Variability And Losses," 2000 Annual Meeting, June 29-July 1, 2000, Vancouver, British Columbia 36337, Western Agricultural Economics Association.
    • Handle: RePEc:ags:waeava:36337
    DOI: 10.22004/ag.econ.36337
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    References listed on IDEAS

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    1. Goodwin, Barry K., 1994. "Premium Rate Determination In The Federal Crop Insurance Program: What Do Averages Have To Say About Risk?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 19(2), pages 1-14, December.
    2. Keith H. Coble & Thomas O. Knight & Rulon D. Pope & Jeffery R. Williams, 1996. "Modeling Farm-Level Crop Insurance Demand with Panel Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 439-447.
    3. Bryan Schurle & Mike Tholstrup, 1989. "Farm Characteristics and Business Risk in Production Agriculture," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 11(2), pages 183-188.
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    5. Jerry Hausman, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    6. Breusch, T S & Pagan, A R, 1979. "A Simple Test for Heteroscedasticity and Random Coefficient Variation," Econometrica, Econometric Society, vol. 47(5), pages 1287-1294, September.
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    Cited by:

    1. Collins-Sowah, Peron A. & Henning, Christian H. C. A., 2019. "Risk management and its implications on household incomes," Working Papers of Agricultural Policy WP2019-05, University of Kiel, Department of Agricultural Economics, Chair of Agricultural Policy.
    2. Enjolras, Geoffroy & Capitanio, Fabian & Aubert, Magali & Adinolfi, Felice, "undated". "Direct payments, crop insurance and the volatility of farm income. Some evidence in France and in Italy," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122478, European Association of Agricultural Economists.
    3. Dunn, Jerry W. & Williams, Jeffery R., 2001. "The Relationship Between Incomes, Farm Characteristics, Cost Efficiences, And Rate Of Return To Capital Managed," 2001 Annual Meeting, July 8-11, 2001, Logan, Utah 36151, Western Agricultural Economics Association.

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