Do the Largest Firms Grow the Fastest? The Case of U.S. Dairies

tail, and farms within each of these cohorts became more size heterogeneous. It is also
apparent that a few farms in each cohort grew considerably. On the other hand, the tenth
cohort became somewhat more symmetric and peaked. Its distributional variance was
driven by less frequent extreme deviations and more frequent modestly sized ones.

Firm Growth

Mean growth rates of 1992 dairy farms that remained in production varied
considerably both among cohorts and between censuses. After adjusting for inflation
between the censuses, the dairy farms grew at an average compound rate of 1.1% per
year between the 1992 and 1997 censuses and 1.8% per year between the 1997 and 2002
censuses, averaging 1.5% between 1992 and 2002.

As evident from Figure 1, the most rapid growth rates occurred at both ends of the
1992 size distribution. Average size of cohorts 2-5 each grew less than 1% per year over
the 10-year period. However, the smallest cohort grew at a compound rate of 2.9% per
year, making it the 2^nd most rapidly growing cohort. Each of the three largest cohorts
also grew rapidly, resulting in a bimodal growth distribution. The largest cohort grew the
most rapidly - 3.3% per year.

The bimodality of the growth distribution occurred mainly in the 1^st five years. In
that period, cohort 1 grew more rapidly than any other - 4.9% per year. With the
exception of cohort 10 which grew at a 2.9% rate, none of the other cohorts reached a
1.0% growth rate and most grew at a rate of less that 0.5%. In the 2^nd five years, the
growth rate was strongly and positively correlated (0.90) with cohort number. With the
exception of cohort 3, all cohorts grew at a more rapid (or only slightly slower) rate than
the next smaller cohort.

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