The Conservation Reserve Program, Off-Farm Work, and Farm Household Technical Efficiencies

Using data from a national survey of farm households in the United States, this paper examines the effects of farm households’ decisions to participate in the Conservation Reserve Program (CRP) and to work off the farm on the technical efficiency of farm household production. After controlling for the self selection bias in estimating the multiple output-oriented distance functions, results show that operators’ decisions to work off the farm (both separately and combined with participation in CRP) lead to higher technical efficiencies for farm household production— implying improvements in the resource allocation between farm and other productive activities by farm households. The technical efficiencies of household production of those farm households participating only in the CRP are lower.Conservation Reserve Program, off-farm work, household technical efficiency, Agribusiness, Agricultural Finance, Farm Management,

Are Farmers' Decisions to Work off the Farm and Participate in the Conservation Reserve Program Independent, Joint or Sequential?

There is statistical evidence that decisions to participate in CRP and work off-farm are made simultaneously. Characteristics of households, farm operations other farm programs, and the local economies affect both decisions; some factors affect only one. Policy changes that affect one decision may affect another directly and/or indirectly.CRP, Off-farm labor, Choice Structure, Farm Management,

Does Participation in the Conservation Reserve Program and/or Off-Farm Work Affect the Level and Distribution of Farm Household Income?

Since both release resources from agricultural production, it is not surprising that decisions to work off the farm and to participate in the U. S. Conservation Reserve Program (CRP) are correlated. By incorporating these decisions into a heteroskedastic specification of a farm household income function, we identify their effects on mean income, as well as on the variability in income for groups of farm households participating in combinations of these activities. Our results indicate participation in CRP and off-farm work by the operator and the spouse increase farm household income, but these choices also decrease the variability in household income among participant households relative to that of other farm households with otherwise similar characteristics.Conservation Reserve Program, farm household income, income distribution, off-farm work, Agribusiness, Agricultural Finance, Farm Management,

Explaining Participation in the Conservation Reserve Program and its Effects on Farm Productivity and Efficiency

Using a three-stage sample selection model, we identify factors affecting the probability and level of participation in CRP. Statistical tests support hypotheses that off-farm work and participation in other farm programs are exogenous to the CRP decision. We compare the relative technical and scale efficiencies for CRP participants and non-participants.CRP, Choice Modeling, Productivity, Environmental Economics and Policy,

Does Participation in the Conservation Reserve Program and Off-Farm Work Affect the Level and Distribution of Farm Household Incomes?

Using a national survey of U.S farm households, this paper investigates the interrelationship among the decisions to work off the farm by the operator and the spouse, and participation in the Conservation Reserve Program (CRP). The effects of these three decisions on farm household income are also examined. By estimating a heteroscedastic household income function, we identify the effects of participating in these activities on the average level of farm household income and its variation within each sub-group of farms involved in the several combinations of activities. Our empirical results support the hypothesis that participation in the CRP and decisions to work off the farm by the operator and the spouse are made jointly rather than independently. The operators' decisions to work off the farm and to participate in CRP increase the mean level of the household income, while the spouses' decisions to work off the farm help decrease the variation in household income among households in that sub-group.Farm Management,

Participation in the Conservation Reserve Program and Off-Farm Work: Implications for Farm and Farm Household Productivity

Using a national survey of U.S farm households, we investigate the interrelationship between participation in the Conservation Reserve Program (CRP) and the decision to work off the farm. We go on examine the effects of these two decisions on farm and farm household efficiency and productivity by estimating stochastic frontier productions for farm output and multiple output-orientated distance functions that consider income from agricultural sales, the CRP and off-farm work as outputs of the farm household. We control for the effects of self selection in estimating both the frontier production and distance functions. It appears that operators' decisions to work off the farm have led to significant improvements in household resource allocation between farm and other productive activities by farm households -- leading to high technical efficiency for both farm and farm household activities. In contract, participation in the CRP alone leads to the reduction of the technical efficiency and productivity on farm as well as on combined household activities.Farm Management,

The Conservation Reserve Program, Off-Farm Work, and Farm Household Technical Efficiencies

WP 2009-33 December 2009Using data from a national survey of farm households in the United States, this paper examines the effects of farm households’ decisions to participate in the Conservation Reserve Program (CRP) and to work off the farm on the technical efficiency of farm household production. After controlling for the self selection bias in estimating the multiple output-oriented distance functions, results show that operators’ decisions to work off the farm (both separately and combined with participation in CRP) lead to higher technical efficiencies for farm household production— implying improvements in the resource allocation between farm and other productive activities by farm households. The technical efficiencies of household production of those farm households participating only in the CRP are lower.This research was sponsored in part by Cooperative Agreement No. 43-3AEL-2-80074 between the USDA’s Economic Research Service, Resource Economics Division and Cornell University, College of Agriculture and Life Sciences, Department of Applied Economics and Management

Achieving Environmental Objectives Under Reduced Domestic Agricultural Support and Trade Liberalization: An Empirical Application to Taiwan

We focus on rice policy reform required for Taiwan's admission to the WTO, and examine the effects, theoretically and empirically, of the re-instrumentation of domestic policy needed to achieve environmental objectives when both positive and negative environmental externalities exist. Policies that treat non-commodity attributes in agriculture as secondary to existing aims, such as income support, are unlikely to result in the desired supplies of environmental goods. Those supplies can be achieved at lower government and social costs using policy instruments to achieve environmental goals directly. Results are relatively insensitive to the social values assigned to environmental goods.WTO policy reform, multifunctionality, agri-environmental policy, rice policy, agricultural trade policy, Environmental Economics and Policy, International Relations/Trade,