Online from: 2000
Subject Area: Economics
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|Title:||Factors affecting financial performance of new and beginning farmers|
|Author(s):||Ashok Mishra, (Department of Agricultural Economics and Agribusiness, Louisiana State University, Baton Rouge, Louisiana, USA), Christine Wilson, (Department of Agricultural Economics, Kansas State University, Manhattan, Kansas, USA), Robert Williams, (Economic Research Service, USDA, Washington, District of Columbia, USA)|
|Citation:||Ashok Mishra, Christine Wilson, Robert Williams, (2009) "Factors affecting financial performance of new and beginning farmers", Agricultural Finance Review, Vol. 69 Iss: 2, pp.160 - 179|
|Keywords:||Business formation, Business planning, Farms, Financial performance, Management effectiveness, Payments|
|Article type:||Research paper|
|DOI:||10.1108/00021460910978661 (Permanent URL)|
|Publisher:||Emerald Group Publishing Limited|
|Acknowledgements:||JEL classification – Q12, Q14, Q15, Q18 The authors wish to thank the Editor, Jim Johnson, Bill McBride and Carmen Sandretto for helpful discussions and comments. The views expressed here are not necessarily those of the Economic Research Service or the US Department of Agriculture. This research was supported by the Louisiana State University Agricultural Research Service.|
Purpose – The purpose of this paper is to investigate the factors (farm, operator and household characteristics, along with farm type and regional location of the farm) affecting financial performance of new and beginning farmers and ranchers.
Design/methodology/approach – Returns on assets (ROA), a measure of financial performance widely used in the farm management literature, is the ratio of net farm income plus interest payment to total assets. This measure has been used by Gloy and LaDue and Gloy
Findings – Results from this study show that although there is an inverted U-shaped relationship between age of the operator and financial performance, management strategies such as increasing the number of decision makers, engaging in value-added farming, and having a written business plan can lead to higher financial performance.
Originality/value – More than 50 percent of current farmers are likely to retire in the next five years. US farmers over age 55 control more than half the farmland, while the number of new farmers replacing them has fallen since the Farm Crisis period, 1982-1987. Paralleling this shift in production, agriculture is in a decline in overall farm numbers. Concern in many states arises because the loss adversely affects the future of family farms, the farm economy and healthy rural communities. Additionally, the rapid decline in the entry of new and young farmers is an indication of rising barriers to entry, resulting in calls from within the farming community for public policy measures designed to aid new and beginning farmers.
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