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Aggregate and Farm-Level Productivity Growth in Tobacco: Before and After the Quota Buyout

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  • Barrett E. Kirwan
  • Shinsuke Uchida
  • T. Kirk White

Abstract

We examine the distortionary effects of agricultural policy on farm productivity by examining the response of U.S. tobacco farmers' productivity to the quota buyout of 2004. We focus on the impact of distortionary policy, i.e., the tobacco quota, by decomposing aggregate productivity growth into the contribution of farm-level productivity growth and the contribution of reallocation of resources among tobacco growers. We find that the aggregate productivity of Kentucky tobacco farms grew 44% between 2002 and 2007. The elimination of quota rental costs and reallocation of resources, including entry and exit, accounted for most of the post-buyout productivity growth. Copyright 2012, Oxford University Press.

Suggested Citation

  • Barrett E. Kirwan & Shinsuke Uchida & T. Kirk White, 2012. "Aggregate and Farm-Level Productivity Growth in Tobacco: Before and After the Quota Buyout," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(4), pages 838-853.
    • Handle: RePEc:oup:ajagec:v:94:y:2012:i:4:p:838-853
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    References listed on IDEAS

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    1. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 317-341.
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    Cited by:

    1. Youngjune Kim & Ji Yong Lee, 2020. "Effects of Government Payments on Agricultural Productivity: The Case of South Korea," Sustainability, MDPI, vol. 12(9), pages 1-11, April.
    2. Restuccia, Diego, 2016. "Comment," LSE Research Online Documents on Economics 123114, London School of Economics and Political Science, LSE Library.
    3. Frick, Fabian & Sauer, Johannes, 2016. "Deregulation and Productivity – Empirical Evidence on Dairy Production," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236032, Agricultural and Applied Economics Association.
    4. Da-Rocha, José-María & Restuccia, Diego & Tavares, Marina M., 2023. "Policy distortions and aggregate productivity with endogenous establishment-level productivity," European Economic Review, Elsevier, vol. 155(C).
    5. Oglend, Atle & Asche, Frank & Straume, Hans-Martin, 2024. "Rent formation and distortions due to quotas in biological production processes," Resource and Energy Economics, Elsevier, vol. 77(C).
    6. Frick, Fabian & Sauer, Johannes, 2016. "Deregulation And Productivity – Empirical Evidence On Dairy Production," 56th Annual Conference, Bonn, Germany, September 28-30, 2016 244884, German Association of Agricultural Economists (GEWISOLA).
    7. Kehinde Oluseyi Olagunju & Myles Patton & Siyi Feng, 2020. "Estimating the Impact of Decoupled Payments on Farm Production in Northern Ireland: An Instrumental Variable Fixed Effect Approach," Sustainability, MDPI, vol. 12(8), pages 1-17, April.
    8. Zeng, Shuwei & Gould, Brian & Thorne, Fiona & Laepple, Doris, "undated". "EU Milk Quota Elimination: Has the Productivity of Irish Dairy Farms Been Impacted?," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 261218, Agricultural and Applied Economics Association.
    9. Heesun, Jang & Xiaodong, Du, 2014. "Spatiotemporal Analysis of Dairy Farm Productivity, Size, and Entry-Exit in the US," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169824, Agricultural and Applied Economics Association.
    10. Xiaoguang Li & Sishu Zhou & Hong Chen, 2024. "Assessing the Effect of Factor Misallocation on Grain Green Production Capacity: A Case Study of Prefecture-Level Cities in Heilongjiang Province," Agriculture, MDPI, vol. 14(8), pages 1-22, August.
    11. MacDonald, James M. & Korb, Penni & Hoppe, Robert A., 2013. "Farm Size and the Organization of U.S. Crop Farming," Economic Research Report 262221, United States Department of Agriculture, Economic Research Service.
    12. Jared Hutchins & Yating Gong & Xiaodong Du, 2024. "The role of animal breeding in productivity growth: Evidence from Wisconsin dairy farms," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(1), pages 286-305, January.
    13. Daniel A. Sumner, 2014. "American Farms Keep Growing: Size, Productivity, and Policy," Journal of Economic Perspectives, American Economic Association, vol. 28(1), pages 147-166, Winter.

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    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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