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Profit patterns in the U.S. and the West, 1992 and 1997: What county-level data reveal

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  • Korb, Penelope
  • Blank, Steven C.
  • Erickson, Kenneth W.

Abstract

We examine whether there are spatial relationships in U.S. production agriculture's profitability across regions and over time. We test the traditional view that factor markets (approximately) adjust to equalize agriculture's net returns over space and time using county-level data from the USDA's Census of Agriculture, 1992 and 1997. We estimate Gini coefficients and calculate the Theil Entropy Measure (TMI) to examine changes in the concentration of returns over space and time, and to decompose the variation in inequality in returns into two components: the percent of total variation in returns due to within-region inequality, and the percent of variation in returns due to between-region variation in returns. Although factor markets (approximately) adjust to equalize net returns over space and time, there is still considerable variability in returns within regions and within states. Use of county-level (Census of Agriculture) and farm-level data (ARMS Survey) to help highlight these differences. In general, farm-level Gini coefficients have remained fairly constant but show a mild increase in concentration since the 1996 FAIR Act. The TMI analysis reveals that in 1997 about 54 percent of the variation in total returns (net cash returns) was due to within-region variation, and about 46 percent was due to (average) between region variation (compared to 53 and 47 percent in 1992). Total U.S. inequality of net cash returns increased from 0.14 in 1992 to 0.21 in 1997.

Suggested Citation

  • Korb, Penelope & Blank, Steven C. & Erickson, Kenneth W., 2004. "Profit patterns in the U.S. and the West, 1992 and 1997: What county-level data reveal," 2004 Annual Meeting, June 30-July 2, 2004, Honolulu, Hawaii 291740, Western Agricultural Economics Association.
    • Handle: RePEc:ags:waeaho:291740
    DOI: 10.22004/ag.econ.291740
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    Agricultural Finance; Farm Management;

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