Separated Ownership and Control Grain Farming: Bounded by Agency Costs or Crowding Out?

21 Pages Posted: 28 Sep 2013

See all articles by Matthew S. Elliott

Matthew S. Elliott

University of Missouri at Columbia - Agricultural and Applied Economics

Harvey S. James, Jr.

University of Missouri at Columbia - Division of Applied Social Sciences

Date Written: September 26, 2013

Abstract

This paper examines technical efficiency of more separated ownership and control (SOC) grain and oilseed farms relative to combined ownership and control (COC) in the U.S. Theory has provided specific benefits to why SOC firms can be more efficient, thus more likely to survive, despite SOC being prone to agency costs. Though, the literature often contends that the evolution to more SOC farming - particularly in grain farming - is bounded by agency costs, allowing COC to persist and dominate. However, some commentators have noted the rise of “corporate farming” which has manifested into public policy to constrain types of SOC farming through anti-corporate farming laws. We use Agriculture Resource and Management Survey (ARMs) data and estimate technical efficiency of SOC, mixed, and COC grain farms using stochastic frontier analysis (SFA). We examine whether SOC grain and oilseed farms are crowding out COC farms, or whether the evolution to more SOC farming is bounded by agency costs.

Keywords: Agency Costs, Farm, Ownership, Control, transaction costs, stochastic frontier analysis

JEL Classification: L2

Suggested Citation

Elliott, Matthew S. and James, Harvey S., Separated Ownership and Control Grain Farming: Bounded by Agency Costs or Crowding Out? (September 26, 2013). Available at SSRN: https://ssrn.com/abstract=2331690 or http://dx.doi.org/10.2139/ssrn.2331690

Matthew S. Elliott (Contact Author)

University of Missouri at Columbia - Agricultural and Applied Economics ( email )

Columbia, MO 65211
United States

Harvey S. James

University of Missouri at Columbia - Division of Applied Social Sciences ( email )

Columbia, MO
United States
573-884-9682 (Phone)

HOME PAGE: http://https://hsjames2.wordpress.com

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