DOES THE FARM SECTOR HAVE A CRITICAL MASS?

Lori Lynch and Janet Carpenter

No 28552, Working Papers from University of Maryland, Department of Agricultural and Resource Economics

Abstract: We examine if the farm sector has a critical mass. If a critical mass of farmland acres is needed to sustain a viable agricultural sector, agriculture profits may decline once a region has dropped below this threshold, causing the rate of farmland loss to accelerate. Agricultural census and population and housing census data were assembled as a panel by county and five-year time periods for the 50-year period (1949-1997) for six Mid-Atlantic States. Three random effects models were estimated. The general model indicates that having less than 189,240 harvested cropland acres accelerates a county's rate of farmland loss. As acres increase by 10% (5,400 acres), the 5-year loss rate decreases from the predicted 7.9% to 7.67%. As sales and percent change in income increase, the rate of farmland loss also decreases. The rate falls with the introduction of a preferential taxation program. As expenses, population density, percent change in total housing units, and percent unemployment increase, the rate of farmland loss accelerates. The rate accelerates if the county is metropolitan. Yet when the data is divided into an early (pre-1978) and late (post-1978) period, this threshold effect disappears in the later period. The earlier model's results are similar but in the later period, increases in population density and sales, increase the rate of loss. Conversely and counter-intuitively, as expenses increase, the rate of loss decreases. Apparently, even if a threshold existed, our results suggest it might dissipate overtime.

Keywords: Land; Economics/Use (search for similar items in EconPapers)
Pages: 34
Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:ags:umdrwp:28552

DOI: 10.22004/ag.econ.28552

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