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A Production-Investment Decision Model of Farm Firm Growth

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  • Michael D. Boehlje
  • T. Kelley White

Abstract

This article presents the conceptualization of a farm firm growth model which includes both investment and production decisions. The results obtained in the application of the model to a hypothetical Central Indiana farm under alternative resource availability and optimizing criteria assumptions are reviewed. These applications demonstrate the interaction between investment and production decisions in the growth process and indicate that under realistic conditions optimal firm growth is not scale growth. They also indicate that the growth process and the terminal size are different for different objective functions. Finally, the results illustrate the applicability of such a model for investigating farm firm adjustments in a growth context.

Suggested Citation

  • Michael D. Boehlje & T. Kelley White, 1969. "A Production-Investment Decision Model of Farm Firm Growth," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 51(3), pages 546-563.
    • Handle: RePEc:oup:ajagec:v:51:y:1969:i:3:p:546-563.
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    Cited by:

    1. Haile, B.O. & Grove, Bennie & Oosthuizen, L.K., 2005. "Impact of capital on the growth process of a sugarcane farm in Mpumalanga," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 44(4), pages 1-13, December.
    2. Kolajo, Ebenezer F. & Martin, Neil R., Jr., 1987. "Farm Firm Decisions Modeling: A Methodological Evaluation Of Alternative Farm Growth Modeling Approaches," 1987 Annual Meeting, August 2-5, East Lansing, Michigan 269948, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Jensen, Harald R., 1977. "PART I. Farm Management and Production Economics, 1946-70," AAEA Monographs, Agricultural and Applied Economics Association, number 337213, january.
    4. Johnson, Donald A. & Boehlje, Michael, 1983. "Managing Risk By Coordinating Investment, Marketing, And Production Strategies," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 8(2), pages 1-15, December.
    5. Aude Ridier, 2004. "Les effets du découplage des aides directes sur des exploitations de viande bovine en présence de risque," Économie rurale, Programme National Persée, vol. 279(1), pages 7-19.
    6. Walker, Odell L. & Hardin, Mike L. & Mapp, Harry P., Jr. & Roush, Clint E., 1979. "Farm Growth And Estate Transfer In An Uncertain Environment," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 11(1), pages 1-12, July.
    7. Baker, C.B. & Barry, Peter J. & Lee, Warren F. & Olson, Carl E. & Hochman, Eithan & Rausser, Gordon S. & Kottke, Marvin W., 1977. "Economic Growth of the Agricultural Firm," Western Region Archives 260636, Western Region - Western Extension Directors Association (WEDA).
    8. Pounder, John T. & Schoney, Richard A. & Peterson, Gustof A., 1980. "The Impact Of Capital Gains Tax Treatments On Optimal Livestock Enterprise Selection," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 12(2), pages 1-7, December.
    9. Drabenstott, Mark R., 1980. "The small family farm: can it survive ?," ISU General Staff Papers 1980010108000017606, Iowa State University, Department of Economics.
    10. Anderson, Jock R., 1972. "An Overview of Modelling in Agricultural Management," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 40(03), pages 1-12, September.
    11. Libbin, James D. & Johnson, Donald A. & Boehlje, Michael D. & Trede, Larry D., 1977. "A Risk-Return Analysis For The Midwest Farmer-Feeder," ISU General Staff Papers 197712010800001065, Iowa State University, Department of Economics.
    12. Hanson, Gregory D. & Thompson, Jerry L., 1978. "Maximum Feasible Farm Debt By Farm Type," Staff Papers 14212, University of Minnesota, Department of Applied Economics.
    13. Humberd, D. Ray, 1971. "Actual Versus Potential Growth Of A Farm Firm: An Ex Post Analysis," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 3(1), pages 1-7, December.
    14. Renborg, Ulf, 1970. "Growth of the Agricultural Firm: Problems and Theories," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 38(02), pages 1-51, June.
    15. Ockwell, Anthony P. & Batterham, Robert L., 1982. "The Influence of Credit on Farm Growth," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 50(03), pages 1-18, December.
    16. Reid, Donald W. & Musser, Wesley N. & Martin, Neil R., Jr., 1978. "Income Tax Aspects Of Liquidation In Multiperiod Linear Growth Models," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 10(2), pages 1-6, December.
    17. Braford, Garnett L. & Reid, Donald W., 1984. "A Mathematical Programming Decision Model For Farm Machinery Replacement: A Conceptual Specification," 1984 Annual Meeting, August 5-8, Ithaca, New York 279091, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    18. Gutierrez, Paul H. & Dalsted, Norman L. & Jonk, Yvonne C., 1989. "Selection and Development of the Replacement Asset: The Case of the Replacement Beef Heifer," WAEA/ WFEA Conference Archive (1929-1995) 244997, Western Agricultural Economics Association.
    19. Sawani, Mustafa A. & Finley, Robert M. & Kliebenstein, James B., 1986. "Impact Of Farm Indebtedness On Farm Income And Survival," 1986 Annual Meeting, July 27-30, Reno, Nevada 278069, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    20. Lowenberg-DeBoer, James & Boehlje, Michael, 1985. "Integration Of Production And Financial Theory In Analyzing Firm Behavior," 1985 Regional Committee NC-161, October 9-10, 1985, St. Louis, Missouri 140930, Regional Research Committee NC-1014: Agricultural and Rural Finance Markets in Transition.
    21. Reid, Donald W. & Musser, Wesley N., 1984. "Some Theoretical and Methodological Issues in Analyzing Investment Decisions for Farmers," Regional Research Projects >1984: S-180 Annual Meeting, March 25-28, 1984, New Orleans, Louisiana 307234, Regional Research Projects > S-180: An Economic Analysis of Risk Management Strategies for Agricultural Production Firms.
    22. Debrecht, Dennis Michael, 1981. "Lending limits and the availability of credit to agricultural borrowers," ISU General Staff Papers 198101010800008411, Iowa State University, Department of Economics.

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