Urban Influence on Costs of Production in the Corn Belt

17 Pages Posted: 24 Apr 2020

See all articles by Richard Nehring

Richard Nehring

affiliation not provided to SSRN

Charles Barnard

U.S. Department of Agriculture (USDA) - Agricultural Research Service

David Banker

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Vincent E. Breneman

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Date Written: November 2006

Abstract

This article determines the relative technical efficiency of rural‐ and urban‐influenced crop/livestock enterprises in the Corn Belt. Farmers in urban‐influenced locations are less technically efficient than farmers in rural locations. During 1998–2000, stochastic production frontier procedures indicate that a 10% increase in urban influence leads to a close to 4% decrease in technical efficiency. The most successful urban‐influenced farms have controlled costs as effectively as rural farms. They have tended to de‐emphasize that nondairy livestock activities—particularly beef and hogs—do not rely extensively on off‐farm income, and have relatively large, less residential/lifestyle operations compared to less successful urban‐influenced farmers. However, our statistical analysis clearly bears out the refrain in popular literature that urban proximity raises the cost for, and decreases the viability of, traditional farms.

Keywords: input distance function, scale efficiency, stochastic production frontier, technical efficiency, urban influence

Suggested Citation

Nehring, Richard and Barnard, Charles and Banker, David and Breneman, Vince, Urban Influence on Costs of Production in the Corn Belt (November 2006). American Journal of Agricultural Economics, Vol. 88, Issue 4, pp. 930-946, 2006, Available at SSRN: https://ssrn.com/abstract=3582923 or http://dx.doi.org/10.1111/j.1467-8276.2006.00907.x

Richard Nehring (Contact Author)

affiliation not provided to SSRN

No Address Available

Charles Barnard

U.S. Department of Agriculture (USDA) - Agricultural Research Service ( email )

Jamie L. Whitten Building
1400 Independence Ave., S.W.
Washington, DC 20250
United States

David Banker

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States

Vince Breneman

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States
202-694-5597 (Phone)

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