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Joint measurement of farm size and farm performance: a confirmatory factor analysis

Joleen C. Hadrich (Department of Agribusiness and Applied Economics, North Dakota State University, Fargo, North Dakota, USA)
Frayne Olson (Department of Agribusiness and Applied Economics, North Dakota State University, Fargo, North Dakota, USA)

Agricultural Finance Review

ISSN: 0002-1466

Article publication date: 8 November 2011

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682

Abstract

Purpose

The purpose of this paper is to determine if a single dominant measure defines farm size and farm performance consistently over a ten‐year time period, or if alternative measures are needed. The paper also seeks to determine the correlation between farm size and farm performance and how this correlation may change over time.

Design/methodology/approach

A confirmatory factor analysis was used to test the relative strength of farm size and performance indicator variables and estimate the relationship between farm size and performance latent variables. Data were collected from the North Dakota Farm and Ranch Business Management Association (NDFRBA) Annual Summaries for 2000‐2009.

Findings

Results demonstrated that a single indicator, such as acres or rate of return on assets, may not capture the array of farm size and farm performance concepts and multiple indicators should be used to jointly determine farm size and farm performance measures. Results also found a sequential decrease in correlation between farm size and performance for seven of the ten years.

Originality/value

This paper addresses the issue regarding multiple measures for farm size and farm performance which helps provide the framework to begin developing a systematic classification of farms for use in strategic farm planning and guide future government policies, federal farm programs, and environmental regulations.

Keywords

Citation

Hadrich, J.C. and Olson, F. (2011), "Joint measurement of farm size and farm performance: a confirmatory factor analysis", Agricultural Finance Review, Vol. 71 No. 3, pp. 295-309. https://doi.org/10.1108/00021461111177585

Publisher

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Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited