Aggregate and Farm-level Productivity Growth in Tobacco: Before and After the Quota Buyout

Barrett Kirwan, T. Kirk White and Shinsuke Uchida

No 56353, 2010 Annual Meeting, February 6-9, 2010, Orlando, Florida from Southern Agricultural Economics Association

Abstract: We examine the distortionary effects of agricultural policy on farm productivity by examining the response of U.S. tobacco farmers' productivity to the quota buyout of 2004. We isolate the impact of distortionary policy, i.e., the tobacco quota, by decomposing aggregate productivity growth into the contribution of farm-level productivity growth and the contribution of reallocation of resources among tobacco growers. Reallocation of resources includes entry into and exit from tobacco farming, as well as growth or decline of the resources allocated to existing tobacco farms. We find that aggregate productivity of Kentucky tobacco farms grew 37% between 2002 and 2007. Reallocation of resources among continuing tobacco farms contributed 22 percentage points to productivity growth. Reallocation through entry and exit contributed 10 percentage points, and the elimination of quota rental costs directly contributed 5 percentage points.

Keywords: Crop Production/Industries; Productivity Analysis (search for similar items in EconPapers)
Pages: 25
Date: 2010-01
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Journal Article: Aggregate and Farm-Level Productivity Growth in Tobacco: Before and After the Quota Buyout (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:saea10:56353

DOI: 10.22004/ag.econ.56353

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