Drivers of Profit Inefficiency in Iowa Crop Production
Wendiam Sawadgo and
ISU General Staff Papers from Iowa State University, Department of Economics
In this paper, we use data envelopment analysis and a panel of Iowa farms to evaluate profit inefficiency in corn and soybean production. We find that farms have, on average, profit inefficiency scores of 89.4% in combined corn and soybean production, suggesting that profit could be increased by 89.4% if farms eliminated technical and allocative inefficiencies. Overall, profit efficiency improved from 2011 to 2018, a period generally characterized by decreasing farm net worth. Moreover, while factors such as farm size and operator age affect technical inefficiency, these variables do not have a significant effect on profit inefficiency, while farmsâ€™ net worth per acre and crop insurance indemnity payments positively affect profit inefficiency. Land tenure does not have a significant effect on technical or profit inefficiency.
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Working Paper: Drivers of Profit Inefficiency in Iowa Crop Production (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genstf:202001010800001056
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