PR - Productivity And Farm Size

The objective of this paper was to examine productivity differences among individual farms. The Malmquist index approach was used to estimate productivity for each farm and to decompose productivity change into technical change and efficiency change. The relationship between productivity and farm size was explored. In addition, the relationships between each productivity component and outputs, and each productivity component and inputs were explored. For the sample of Kansas farms used in this study, average annual productivity change over the 20-year period for the sample of farms was 2.16%. Technical change averaged 1.54% per year and efficiency change averaged 0.61% per year. Productivity was significant and positively related to farm size and feed grain production, and significant and negatively related to labor use. The largest farms, those with real gross farm income greater than $500,000, had the largest annual average productivity change at 3.20%.

Keywords: productivity, competitive advantage, farm performance.