An Analysis of Scale Economies on Commercial Illinois Cash Grain Farms
Batte, Marvin Thomas
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https://hdl.handle.net/2142/66785
Description
Title
An Analysis of Scale Economies on Commercial Illinois Cash Grain Farms
Author(s)
Batte, Marvin Thomas
Issue Date
1981
Department of Study
Agricultural Economics
Discipline
Agricultural Economics
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Economics, Agricultural
Language
eng
Abstract
The primary objective of this study was to estimate the degree to which economies or diseconomies of scale exist on commercial Illinois farms. The analysis was conducted on both a before--and after--tax basis.
The data utilized in this study was a sample of cash grain producers from the membership of the Illinois Farm Business Farm Management Association. The farms were selected to be primarily producers of corn, soybean, and wheat. Data were available for the five year period, 1975-1979. There were 168 producers who maintained continuous records of the entire period. This allowed that the data be pooled over time series and cross section.
Multiple Regression was the primary analytical tool used for the estimation. The model was formulated as an analysis of covariance in order to more fully utilize the information from the pooled data.
Mixed estimation techniques were employed to allocate costs between the three crop enterprises. This allowed prior information to be included in the estimation process. Proportionality relationships among the three crops, derived from budget information, were included as stochastic linear restrictions in the estimation process. The costs allocated to each crop were then stated as an average per unit of output and employed as the dependent variables in the analyses of covariance models.
Information from the producers depreciation schedule was used to simulate the amounts of depreciation, investment credits and taxes for the individual farm operator. This information was included in the total cost of production in order to arrive at an estimate of the after tax cost of production for each crop.
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