Do the Largest Firms Grow and Diversify the Fastest? The Case of U.S. Dairies

Almuhanad Melhim, Erik J. O'Donoghue and C. Richard Shumway

Review of Agricultural Economics, 2009, vol. 31, issue 2, pages 284-302

Abstract: We analyze growth and diversification of U.S. dairy farms by examining changes in ten size cohorts and new entrants through three successive censuses. We reject Gibrat's law and the mean reversion hypothesis of growth. Growth rates appear bimodal where the smallest and largest farm cohorts grow fastest. All cohorts diversify but the largest farms do not diversify as rapidly as medium-sized farms. New entrants are generally large, and they diversify more rapidly than comparably sized incumbents do. These data suggest that scale economies persist even for the largest cohort of U.S. dairy farms and scale economies dominate scope economies for large farms. Copyright 2009 Agricultural and Applied Economics Association

Date: 2009

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