Agriculture Reference
In-Depth Information
Table 9.2
Definition of variables
Dependent variables
CAPITAL
=
total capital assets (buildings, land and equipment) in $100,000.
FAMILY FARM
=
1 if the farm is owned and operated by the family farmer.
FARM ACRES
=
number of acres on the farm.
Independent variables
AGE
=
farmer's age in years.
BC
=
1 if the farm is located in British Columbia;=0iflocated in Louisiana.
BEEF
=
1 if farm livestock are beef cattle;=0ifnobeef cattle.
CYCLES
>
1
=
fraction of farmland in crops that have more than one cycle; = 0 otherwise.
CYCLES
<
1
=
fraction of farmland in crops that have fewer than one cycle; = 0 otherwise.
DAIRY
=
1 if farm livestock are dairy cattle;=0ifnodairy cattle.
EDUCATION
=
number of years of formal schooling.
FAMILY FARM
=
1 if the farm is owned and operated by the family farmer;
=
0 if not a family farm.
IRRIGATION
=
fraction of land plot that is irrigated.
RENTED LAND
=
1 if land was rented;=0ifowned.
The contrast between industrial livestock and grain farming, which could hardly be more
dramatic, results from the elimination of seasonal parameters and the reduction of random
forces (
2
) in their production (predictions 9.3 and 9.5). The driving force in modern
livestock production is to reduce the role of nature by bringing production indoors to control
climate and disease. As a result, except for cow-calf operations, the livestock industry is
perhaps the most specialized of any farm commodity, and the most dominated by companies
organized in the corporate-factory form.
41
θ
and
σ
Evidence from Contemporary Farms in Louisiana and British Columbia
The evidence from the historical and aggregate data provides support for our model, but it
does not allow us to conduct any formal econometric hypothesis tests. In this section we use
our farm-level data to test some specific predictions. This analysis comes in two parts. First,
we estimate the determinants of farm organization; that is, the determinants of the choice
between family and larger nonfamily organizations. Second, we estimate the effect of the
choice of farm organization on the size of the farm, both in terms of the value of capital
and the acreage controlled by the farm. The variables used in the regressions are listed and
defined in table 9.2. For the first exercise we use a dummy variable FAMILY FARM to
identify family farms.
42
For the second exercise we use CAPITAL and FARM ACRES as
our dependent variables.
