PER UNIT COSTS TO OWN AND OPERATE FARM MACHINERY

true custom rate, then machinery costs are a strength for the farm. If the farm is performing
machinery operations for more than the true custom rates, then machinery costs would be a
weakness and the farm might consider “out sourcing,” or having someone else perform the
machinery operations by hiring custom work to be done.

Models

The underlying conceptual model of this research is based on the premise that crop
machinery costs are dependent upon the field operations performed and the size of the farm, with
farm size being represented by harvested acres, and is characterized as

(1) tcmc = f(field operations, harvested acres).

The dependent variable is the total crop machinery cost (tcmc) for a farm, and the independent
variables are the number of units (acres, tons, bales, etc.) each of the individual farming
operations were performed on as well as the total harvested acres for the given farm. The
conceptual model above was empirically specified with four different functional forms to capture
the scale or size effect of farms. The functional forms include linear, quadratic, reciprocal, and
logarithmic. The empirical specification of the linear model (model 1) is the following
(2)    tcmc_i=[β₁fcwof_i+β₂swof_i+β₃dsk_i+β₄sch_i+β₅dch_i+β₆ddch_i+β₇mbp_i+β₈rcc_i+

β₉dntwof_i+β₁₀drtwof_i+β₁₁pntwof_i+β₁₂prtwof_i+β₁₃spc_i+β₁₄spf_i+β₁₅spcf_i+β₁₆nh_3i+β₁₇bdf_i+
β₁₈ilf_i+β₁₉hw_i+β₂₀whtyd_i+β₂₁hc_i+β₂₂cornyd_i+β₂₃hgs_i+β₂₄gsyd_i+β₂₅hsb_i+β₂₆sbyd_i+
β₂₇hsf_i+β₂₈swth_i+β₂₉rh_i+β₃₀slrb_i+β₃₁llrb_i+β₃₂lsb_i+β₃₃ssb_i+β₃₄cs_i+β₃₅rm_i+β₃₆fpm_i+
β₃₇gsm_i +(β₃₈β₁fcwf_i) +(β₃₈β₂swf_i) +(β₈β₉dntwf_i) +(β₃₈β₁₀drtwf_i) +(β₃₈β₁₁pntwf_i) +
(β₃₈β₁₂prtwf_i)]{β₃₉+β₄₀ha_i}+e_i,

where variables in the model are defined in Table 1 and the subscript i denotes individual farms.

The estimated coefficients β₁ to β₃₇ represent the per unit charge to perform the
respective field operations. The sign on all of the coefficients is expected to be positive, as to
say it actually does cost money to perform field operations. The estimated coefficients β₂₀ ,

<<   3   4   5   6   7   8   9   >>

More intriguing information