Alternative approaches for sharing machinery, labor, and other resources among small- and medium-sized agricultural producers

Gregory Colson

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: As the U.S. agriculture industry continues to become increasingly concentrated, the viability of small- and medium-sized farms faced with diminishing profit margins per unit of output hinges in part on their ability to expand operations. In this study, the solution to this problem of taking advantage of economies of scale through farm-level resource sharing arrangements is considered. Through a two phase data collection procedure, Midwestern farmer groups engaged in resource sharing arrangements were identified and investigated through a case study approach. Evidence from the case studies suggest that sharing of equipment and labor can yield not only financial benefits but also enable expansions in cultivated acreage, access to better technologies, greater operational efficiencies, and improved access to information. As well, a cost-benefit model is developed to explore the potential economies of scale in sharing machinery among multiple farms. The model quantifies the significant potential for equipment cost reductions through cooperation.

Date: 2008-01-01
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