Sharing Inputs and Outputs - The Nature of the Farm - page 90

Table 5.11
Cropshare frequencies by crop type and input cost allocation

Nebraska-South Dakota Northern Illinois Nebraska-South Dakota Southern Illinois

Corn Soybeans All crops Corn Soybeans All crops

Inputs shared? Yes Yes Uncertain No No Uncertain

Farmers' share
(%)
3/4 (75) 0 0 0 1.2 0.6 0
2/3 (67) 8.3 3.6 1.7 28.3 15.7 53.5
3/5 (60) 16.6 17.4 2.3 60.1 73.7 31
1/2 (50) 69.7 74.6 94.8 6.8 6.1 14
Sources: Illinois data from Young and Burke (2001), Figure 3, p. 562. The Nebraska-South Dakota data does not
include irrigated cropland.

find in Illinois. Table 5.11 also shows the frequency distribution of cropshare terms for
these same crops when inputs are not shared. The distinction between contracts with and
without input sharing is striking. When inputs are not shared, the 50-50 contract falls from
the dominant type to third place after 3/5 and 2/3.
The distinction between contracts with and without input sharing is remarkably similar
to the distinction Young and Burke find when comparing northern to southern Illinois.
Young and Burke find that over 90 percent of the shares are 50-50 in northern region
but both 3/5 and 2/3 contracts easily dominate 50-50 in the southern region of the state.
They attribute the difference to “regional custom” based on soil differences. However,
their data seem to show a correlation between input and output sharing. In fact, in an
unpublished companion paper, Burke and Young (2000) state: “In the north, over 86%
of the contracts are (1/2, 1/2) [that is, the output share is 1/2 and the input share is also
1.2]. In the south, about 39% of the contracts are of the form (3/5, 1) or (2/3, 1); fully 79%
of the contracts use either 3/5 or 2/3 as the tenant's share of output and 3/5, 2/3, or 1 as
the tenant's share of input” (7). We consulted the source of the Illinois data used by Young
and Burke and found that the northern regions share inputs 96 percent of the time, while
in the southern region this occurs only 33 percent of the time. 19 Hence, it seems that the
difference attributed to regional custom based on soil quality actually reflects differences
in input sharing.
As we point out in this chapter, input sharing terms are crucial in understanding the
structure of cropshare contracts. Depending on the input sharing rule, one might find
common shares, but the shares vary with the degree of input sharing. In fact, we would
predict that the contracts in the northern region of Illinois are nearly all contracts in which
the input costs are shared, and in particular the input shares are 50-50.