PR - Determining Labour Efficiency Of U.S. Row Crop Production

Technology is continually improving the technical efficiency of agriculture. Advances in seeds, chemicals, machinery, and other inputs are allowing farmers to produce more than ever before and with fewer inputs. In addition, the available supply of agricultural labour has been shrinking. One problem facing producers is determining what practices lead to labour savings and where is additional labour savings likely to occur. As quality labour becomes more expensive and difficult to obtain, producers will want to know how best to allocate their resources in order to obtain maximum labour efficiency. This paper uses seven years of farmer data from cotton and soybean production to develop a model that shows the factors determining the hours of labor required to produce each of the crops. The model is based on a regression analysis of 900 farmer observations from the Mississippi delta. In addition, the model shows how effective each factor is for reducing labour and whether the factor is more important for cotton or soybeans. Results show that farm size, field size, percent rented land, percent of farm planted to soybeans or cotton, percent custom expenses, percent GMO seed varieties, and row spacing can all be important factors determining labour hour requirements. Bigger farms have economies of scale for both cotton and soybean farms. However, the coefficient for cotton is twice as large meaning that cotton farms see a bigger gain in labour reduction by expanding than do soybean farms. The use of GMO had a similar effect as it both reduced labour and was more effective for cotton than soybeans. The major difference between cotton and soybean farms was in the degree of specialisation. For cotton farms, adding more cotton reduced labour while for soybeans, adding more increased labour. These results indicate that cotton farms are likely to continue to expand and also be more specialised. Farms growing soybeans are likely to grow a mix of crops but will continue to expand as well. These results should be useful to producers looking for ways to save labour and also to policy makers considering minimum wage laws and payment programs that might limit farm size.