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What does Initial Farm Size Imply About Growth and Diversification?

Almuhanad Melhim, Erik O'Donoghue and C. Shumway ()

No 2008-5, Working Papers from School of Economic Sciences, Washington State University

Abstract: Recent consolidation in agriculture has shifted production toward fewer but larger farms, reshaping business relationships between farmers, processors, input suppliers, and local communities. We analyze growth and diversification of U.S. corn, wheat, apple, and beef, farms by examining longitudinal changes in ten size cohorts through three successive censuses. We fail to reject Gibrat’s law in apple and wheat industries and the mean reversion hypothesis in beef and corn industries. Apple and wheat farms diversify over time. Findings suggest that scale economies diminish for large farms across all four industries and scope economies dominate scale economies for large apple and wheat farms.

Keywords: firm growth; diversification; scale economies; scope economies; Gibrat’s law; longitudinal data (search for similar items in EconPapers)
JEL-codes: Q12 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2008-04
New Economics Papers: this item is included in nep-agr and nep-cse
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http://faculty.ses.wsu.edu/WorkingPapers/Shumway/FarmSize-jaaerevision.pdf First version, 2008 (application/pdf)

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Journal Article: What Does Initial Farm Size Imply About Growth and Diversification? (2009) Downloads
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