AGRICULTURAL PRODUCTIVITY AND PRODUCTIVITY COMPONENTS: ANALYSIS OF CLIMATE, CREDIT ACCESS, AND OFF-FARM LABOR SUPPLY

Abstract

In the first chapter, we systematically examine factors affecting all three components of total factor productivity change in U.S. agriculture – technical change, technical efficiency change, and scale and mix efficiency change. We find that climate change (measured as lagged 50-year rolling averages of temperature and precipitation) has the largest impact on each of the components. Its impact, however, is heterogeneous both among components and across states. Further, results show that technical change (the main component affecting total factor productivity change) is significantly impacted by innovation through public research and improved human capital through education and health care access. In the second chapter, we examine the impact of credit access on U.S. agricultural productivity. As competitive farmers pursue profit maximization, increased credit access is beneficial to both productivity and short-run profit if the farm is operating in the region where marginal product is greater than average product. However, increasing credit access may increase short-run farm profit while decreasing productivity if the competitive farm is operating in the region where marginal product is less than average product. Empirical results show that increased credit access is beneficial for both productivity and short-run profit which suggest that limited credit access is sufficient not only to prevent farmers from maximizing short-run profit but also to prevent them from even reaching the boundary between stages one and two of the production function (which would allow them to maximize long-run profit). In the third chapter, we examine off-farm work and technical efficiency on U.S. dairies. Off-farm work has been the major provider of farm households’ income and the off-farm income share has increased dramatically over the past half century. Using a nationally-representative sample of U.S. dairies (2010 Agricultural Resource Management Survey) and a parametric approach (stochastic frontier analysis), we find that an increase in off-farm work by the farm household is associated with a decrease in technical efficiency. Further, results show that there is a statistically significant difference in technical efficiency between small, medium, and large farms. Small farms, which are also associated with high off-farm work, are the least technically efficient.