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June 20, 2016
Financial Management
1
Management Factors: What is Important, Costs, Yields, Prices, or
Production Practices?
Cooper Morris (cooper.h.morris@gmail.com), Elizabeth Yeager (eyeager@ksu.edu), Kevin Dhuyvetter
(kdhuyvetter@elanco.com), and Greg Regier (gregier@ksu.edu).
Kansas State University Department of Agricultural Economics ‐ June 2016
http://www.agmanager.info/farmmgt/finance/management/MgtFactors05‐14_(Jun16).pdf
This paper analyzes the value and feasibility of farming differently than the local average in Kansas crop
production. It is an update of previous research with the addition of several new variables‐‐workers per acre,
machine costs, and crop input costs‐‐to answer additional questions (Dhuyvetter, Morris, & Kastens, 2011;
Kastens, Dhuyvetter, 2007, 2006, 2005, 2004; Nivens, Kastens, & Dhuyvetter, 2002). Farms are broken down by
their characteristics, practices, and management performances in order to identify sources of superior
performance. Do the number of workers per acre explain differences in farm performance? Do machine costs or
crop input costs, relative to averages, have a larger impact on farms’ relative performances? The degree and
consistency of which farms are different than average is also analyzed. To what degree do farms distinguish their
planting intensity from the local average? By how much do the prices received by some farms deviate from the
average price received in a county? Lastly, how consistently farms achieve different than average costs, yields,
prices, and net incomes is analyzed.
This analysis and previous studies have examined farm characteristics and performances over ten‐year
periods going back to the 1992‐2001 period (Nivens, Kastens, & Dhuyvetter, 2002). Since the first study the
estimated impact of farm size and price management increased steadily. The measured impact in this study
deviates from the increasing trend, but farm size and price management continue to be significantly related to
farm performance.
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December 1, 2015
KFMA Newsletters
5
breakeven price for each enterprise, and where can you cut costs without giving up too much potential yield? Is it
possible to renegotiate current cash rent agreements? Carefully consider each machinery purchase and the value it will
add to your operation, and not just the tax implications. Understand your current debt repayment capacity, and use this
information when considering land purchases.
Your analysis provides many of the answers to the above questions. Ask your KFMA economist, and they can point you
in the right direction.
The paper “Management Factors: What is Important, Prices, Yields, Costs, or Technology Adoption?” is available at:
http://www.agmanager.info/farmmgt/finance/investment/MgtFactors01‐10(Jul11).pdf
Economist Spotlight …