THE VARIABILITY OF NET FARM INCOME*

The movements in, and variability of, net farm income over time have considerable impact on the agricultural sector. But variability of income is quite dificult to measure in a satisfactory and objective way. In this note, a previous study (by R. B. Jones) of the variability of net farm income is sunimarised and discussed. Following this, a different approach, involving the use of various time series, is considered. Although the period covered differs from that used by R. B. Jones, his general conclusions remain unaltered. However, the analysis does suggest a definite rise in relative variability since 1963–4. It is felt that the alternative method used has some advantages over the other methods, especially in enabling tests of significance to be used to assess if observed changes are significant, and if the basic underlying assumptions are tenable.     

FARM TENURE AND FARMING PRACTICE

The performance of wholly owned, wholly rented and mixed tenure farms in the Farm Management Survey sample for England and Wales is compared on a range of criteria, controlling farm size and type. Mixed tenure farms are found to perform noticeably better than ‘pure’ tenure types. Possible explanations for inter-tenure differences in performance are reviewed under the headings of capital provision, farmer motivation and resource mobility. Evidence from the FMS and from interviews with 48 farmers provide only weak support for hypotheses relating performance to capital endowments, the ‘spur’ of market rents or asset appreciation. Findings on changes in farm size and tenure, however, suggest that tenure could be determined by, rather than being a determinant of, farm performance.     

FINANCIAL STRESS AND CONSUMPTION EXPECTATIONS AMONG FARM HOUSEHOLDS: NEW ZEALAND'S EXPERIENCE WITH ECONOMIC LIBERALISATION

A review of New Zealand's experience with assistance to agriculture through the 1960s and 1970s and the subsequent deregulation of the sector in the mid-1980s provides background to this study. Data for sheep and beef farmers are used to elaborate the variety of financial changes in the boom and bust cycles that followed the policy changes. Changes in farm business stress are examined using some conventional financial ratios. New measures which partition household expenditure between consumption and investment are then developed. These better explain the stress experienced among farm households as a consequence of the readjustment process and provide insight to the impact of the legacy of debt, encouraged by government intervention, on farmers' current and expected household consumption over recent years. New Zealand's experience reveals that farm household consumption stress has been unevenly distributed. This suggests that policy concern, following the removal of government assistance to agriculture, should focus principally on the mitigation of the household distress caused by ongoing farm debt commitments.     

IMPACTS OF TAXES TO REDUCE AGRICHEMICAL USE WHEN FARM POLICY IS ENDOGENOUS

The economic impacts of policies to reduce water pollution from agriculture have been explored in a number of studies. A standard assumption in this literature is that farm income support policies are given. However, the modern public choice view of agricultural policy suggests that significant environmental initiatives in agriculture would likely be accompanied by changes in farm income policies to protect those with a significant stake in agriculture. We explore the potential effects of such compensating adjustments on the costs and effectiveness of taxes on polluting chemical inputs in US corn production. We find that compensating farm policy adjustments can greatly increase the costs and reduce the effectiveness of the environmental protection measure. The results also indicate the potentially high costs of poor policy co-ordination.     

PARTICIPATION OF FARM OWNERS IN FARM AND OFF-FARM WORK INCLUDING THE OPTION OF FULL-TIME OFF-FARM WORK

The option of working full-time off the farm is generally neglected in farmers' time allocation studies. In this paper, a generalised multinomial logit model, in which the choices are working only on the farm, allocating the time between farm and off-farm work, or working only off-farm, is estimated using Israeli data. The results show that the explanatory variables have significantly different effects on utility for off-farm workers who also work on the farm versus those who do not. There seem to be incentives to work full time rather than part time off the farm. These conclusions cannot be reached if farm owners who do not work on the farm are excluded from the estimation. The conclusions imply that policy intended to encourage pluriactivity could instead result in increased specialisation in full-time farm work or full-time off-farm work if it does not target the right incentives.     

ALTERNATIVE PRODUCTION FRONTIER METHODOLOGIES AND DAIRY FARM EFFICIENCY

This paper estimates technical efficiency (TE) measures using four alternative production frontier models, and evaluates the sensitivity of the results to the choice of methodology. The Cobb-Douglas functional form along with data for 1982 and 1983 from 404 dairy farms located throughout six northeastern states in the US are used in the estimation. A general conclusion is that, broadly speaking, frontier function models are neutrally upwardly scaled versions of the OLS or average model. A second conclusion is that different models yield markedly different efficiency levels across firms. However, the correlation between the indexes from the various methods is high, which implies that the ordinal ranking of firms according to their measured level of technical efficiency appears to be independent of the method used for a given year. By comparison, the correlation between efficiency indexes for the same method across time, although positive, is much lower than the previous set of correlations. Correlation analysis of efficiency versus farm size and of efficiency versus returns over variable costs, based on the alternative models, yielded consistent results.     

INTERPERSONAL VARIATION IN FARM WORKERS‘ EARNINGS: ANALYSIS OF WAGES AND EMPLOYMENT ENQUIRY DATA

Most econometric analyses of the agricultural labour market in Britain have been concerned with explaining the general level of agricultural earnings and changes over time. This study complements such analyses by attempting to explain the variation in earnings between workers at any one time. The study uses multiple-regression analysis of cross-sectional data taken from the Wages and Employment Enquiry. Significant explanatory variables are age, grade and occupation of the worker, farm size, overtime hours and region. There is evidence of (a) an age-earnings profile with peak earnings at 45–54 years, (b) grade differentials which do not follow those expected from the official Agricultural Wages Board wages structure, (c) occupational differentials, (d) earnings rising with farm size, (e) the importance of overtime hours. Unexpected results occur with some of the regional coefficients.     

MANAGEMENT GAMES AND THE TEACHING OF FARM MANAGEMENT*1

The concept of a farm management game is explained, and the relationships between simulation, games and Monte Carlo techniques are discussed. The potential role of farm management games in improving the teaching of farm management is reviewed. The management game is presented as a dynamic case study.     

FARM HOUSEHOLD PRODUCTION IN THE PRESENCE OF RESTRICTIONS ON DEBT: THEORY AND POLICY IMPLICATIONS

In this paper a two period life cycle model of the farm household is constructed allowing for production and restrictions on debt in which the consumption and production decisions of the farm household are simultaneous. It is shown that the farm household's production responses to exogenous changes may be qualitatively different to that predicted by the profit-maximising model when all markets are perfect. In particular, when the household is debt constrained, ‘perverse’ output effects are possible with output increasing in response to output price decreases. Further, for such households, compensation payments will have production effects. Finally, the financial situation of the farm has an impact on production for debt constrained farms.     

FARM FINANCE AND FARM INDEBTEDNESS IN THE EEC

Many farmers in the EEC are currently having to finance an increasing indebtedness when prospective farm profitability is falling, interest rates are likely to remain high and inflation rates are steadying, and taxation is becoming heavier. It is also a time when bankers traditionally specialised in the financing of farming are considering whether to diversify their lending. Thus they are considering more critically the balance between profitability and security in their farm lending.     

STABILITY IN FARM INCOMES

The primary aim of this study has been to measure the extent of income variability in United Kingdom agriculture; to determine whether variability has been diminished; to compare the incidence of variability on various types of farm; to consider to what extent individual farm have consistent or divergent experience of income variation; and to determine whether net incomes generally move in the same direction as the prices of farm products. A secondary aim has been to determine whether income variation in agriculture is greater or less than in other sectors within the United Kingdom and within the United States. Income variation has been found to be roughly twice as large in the farm sector as in other sectors and in all sectors variation was less in the second half of the period studied.     

中国式家庭农场规模效益分类研究

家庭农场是现代农业生产中最有效率的经营模式之一。文章对我国家庭农场概念及现状进行深入分析,并对家庭农场规模的经济效益、成本降低效益以及风险降低效益进行详细分析。该文通过构建规模效益分类模型,运用经济学均衡理论研究影响农场规模的主要因素,应用层次分析方法得到影响规模效益的因素。利用聚类分析方法,对我国农场的规模效益进行分类研究,为我国发展家庭式农场提供参考。     

TOWARDS A MORE DYNAMIC APPROACH TO FARM PLANNING*

The result of an attempt to reconcile practical experience with theoretical production economics, is the development of the view that a more dynamic approach to farm planning may better be achieved by a concentration on data production, rather than on data manipulation. This view is based on the belief that, in practice, the farmer finds himself involved with choice from a relatively narrow, and obvious, set of technically feasible, efficient farm plans. His main problem in the choice of a farm plan is seen as the estimation of the probability that the various possible financial outcomes will be achieved, since the possible effects of the latter on his future list of choices cannot be ignored. The type of data believed to be needed is described, and a line of theoretical analysis followed which is meant to underline the importance of this data, and to develop principles for use in its production.     

How training and innovation link to farm performance: a structural equation analysis

The complexity of modern farm management places great demands on the skill, knowledge and capability of farm managers and their families. Keeping abreast of emerging technologies and innovations that can affect each key farm enterprise, and knowing how best to marshal the resources required for profitable farm production, are key tasks of farm management. This study draws on a longitudinal data set of 240 broadacre farmers to compare and analyse their farm performance over a decade. Using structural equation modelling, we examine relationships between the farm family's involvement in training, their human capital, their use of various innovations and ultimately the linkages of these factors to farm financial and productivity performance. Several statistically significant inter‐relationships are found, and some factors are shown to have significant positive links to farm performance. We find that training undertaken by the farm family, the farm family's human capital and their use of innovations, particularly key cropping innovations, have significant beneficial impacts on farm performance. The farmer's skills in time and organisational management, their engagement in business planning and the unique environmental characteristics of the farm also significantly and positively influence farm performance.     

FARM HOUSEHOLD STRATEGIES AND PLURIACTIVITY IN UPLAND SCOTLAND

This paper considers how farm households in Grampians, an upland area of Scotland, are adapting to changing economic and political pressures. Most farms in the area are family farms, and such farm households are being exhorted to diversify their sources of income and to reduce their reliance on agriculture. Based on surveys in 1988 and 1989, this study finds, to the contrary, that only a small proportion of farmers has been reducing reliance on agricultural sources of income, and few anticipate a declining share of their household income to come from farming. Most farmers are loathe to undertake ancillary non-agricultural occupations because of the lower status implied; and farmers in the study area are found to have a very poor understanding of the broad policy context within which they produce. The paper also confirms the finding of other studies that off-farm employment of household members makes a significant contribution to farm household income; and the nature of such pluriactivity and of pluriactive farm households in the area is reviewed.     

Reasons for adoption of sustainable land management practices in a changing context: A mixed approach in Thailand

A farmer’s decision to adopt sustainable land management practices often takes place in a changing context. In the Northeast Region of Thailand, rural areas face a deagrarianization process and the dominant farming system – small-scale rice farming under rainfed conditions – is losing its role as the main provider of household income. The study applies a mixed approach to investigate the reasons why farmers adopt sustainable land management practices in this region. This approach involved a quantitative assessment of factors that influence adoption and a qualitative analysis of local actors’ opinions regarding these reasons. Two major reasons were identified: the engagement in diversifying production and the willingness to reduce the amount of time household members spend farming. These two reasons relate to two strategies farmers use to adapt to ongoing changes: getting involved in changing the farm or maintaining it while limiting the effort they spend running the farm. Initiatives to enhance the uptake of sustainable land management practices in the Northeast Region of Thailand would benefit from structuring the support provided taking these two strategies into account.     

COMPARATIVE ANALYSIS OF FARM ACCOUNTS

With the development of farm management extension services in Australia, a need has arisen for an analytical technique which can be handled by extension officers and readily comprehended by farmers. Inter farm comparison met this need at a similar stage of development in the United States and United Kingdom, and its application to Australian conditions is discussed. Comparative analysis is presented as an integral feature of farm management accounting.     

FARM DIVERSIFICATION AND RURAL DEVELOPMENT

Under a new policy initiative, grants will be payable for the setting up of ancillary businesses on or adjacent to farms in the UK. While this initiative is to be welcomed, it is suggested that more could be done to develop the rural economy as a whole. Farm diversification grants, modelled on previous farm capital grant schemes, are focused on a narrow range of activities, for which demand is likely to be limited, and are most appropriate for the larger farm. They imply that farmine will continue to be the main activity and run counter to current trends. The goals of rural development and farm income support might be pursued more effectively by encouraging the creation in rural areas of off-farm employment, unrelated to agriculture, and suitable for members of families on low-income farms.     

农业适度规模经营：CES生产函数下的解释

[目的]经济学中经常出现这一现象,在生产要素替代关系相对微弱的情况下,经济总量水平与资源配置效果并非由最优的要素资源所决定,而是取决于最劣的要素资源。为揭示我国农业适度规模经营中是否存在"木桶效应",[方法]利用1990—2014年国有农场相关数据,通过对CES生产函数的拓展与改良,分析了我国农业适度规模经营中的要素资源配置问题。[结果]"木桶效应"存在于我国农业适度规模经营中,土地和劳动力成为发展农业适度规模经营的"短板"要素;[结论]虽然新型农业生产要素对粮食增量产生的作用越来越明显,然而土地资源的不可替代性以及其他要素对劳动力的替代存在边界,使得农业适度规模中的资源配置效果最终由土地和劳动力决定;农业适度规模经营并非是追求单一生产要素的扩张,而是实现土地、劳动力、农业资本、农业机械、农资、农业科技等全要素的高效组合。     

ESTIMATING LINEAR PRODUCTION COEFFICIENTS FROM FARM BUSINESS SURVEY DATA: A NOTE

This paper presents the results of three approaches to estimating linear production coefficients from sample farm data by apportioning total input usage between individual enterprises. It is suggested that the use of Bayesian priors to conduct constrained estimation is preferable to the use of Inequality Restricted Least Squares.