MVPip + «jP (Yp/Xjp) = kjppjp
MVPjf = («jp + Bjf) (Yf∕Xf) = kjFpjF
where, the subscript p stands for part-time farms
and F stands for full-time farms, MVP is the mar-
ginal value productivity, Y is the mean of the
value of gross farm output, Xj is the mean of the
j th factor of production, αjp and («jp + BjF) are
the output elasticities of j th input for the part-
time and full-time farm groups, respectively. The
t-ratio corresponding to output elasticity of j th
input on full-time farms can be calculated as fol-
lows:
t-ratio of (αjp + Bjf) = (αip+ BjF)/{Var (αj) +
Var (Bj) +
2 Cov (oi,Bj)Γ
The dependent variable Y is measured in dollar
terms instead of quantity terms in this paper.
Therefore, the marginal value productivity
(MVP) and marginal productivity (MP) are equal.
Furthermore, some inputs (i.e., K, F, XL) are
also measured in dollars instead of quantity
units, therefore, in case of these inputs, MVPj is
equal to Kj. The estimates of the relative alloca-
tive efficiency coefficients are given in Table 2.
The j th factor of production is over-utilized if
Kj < 1, and under-utilized if Kj > 1, while kj = 1
implies that absolute efficiency has been
achieved in the allocation of this particular factor
of production. If kjp = kjF, then the part-time and
full-time farms are equally efficient in (using) al-
locating that resource. Therefore, data in Table 2
show that: (a) both groups make very intensive
use Oflivestock expenses; (b) the part-time farms
make very intensive use of fertilizer;6 while the
full-time farms slightly under-utilize it; (c) the
part-time farms under-utilize capital, whereas the
full-time farms slightly over-utilize it; (d) labor
remains under-utilized on both types of farms,
but much more so on the full-time farms; and (e)
the part-time farms make intensive use of land,
while the full-time group make almost optimal
use of land. In brief, we can say that the part-
time farm group makes relatively more intensive
use of all inputs, except capital, as compared to
the full-time farm group.
The part-time farm group produces lower
value of output per acre as compared to the full-
time farm group (Table 4). Data given in Table 3
show that the part-time group operates, on an
average, a farm about half the size of the full-time
group. The part-time farm group also uses less
capital and fertilizer per acre as compared to the
full-time farms, but the former group uses more
TABLE 3. Mean Value of Output and Inputs
per Farm, Selected Farms in West Tennessee
Type of |
Farm | ||
Items |
Full-Time |
Part-Time |
All Farms |
Output ($) |
33,613.30 |
10,883.38 |
23,484.94 |
Farm Size (Acres) |
221.85 |
117.85 |
175.51 |
Labor Used (Hrs.) |
657.92 |
394.56 |
540.56 |
Flow of Capital ($) |
4,170.20 |
1,689.01 |
3,064.59 |
Fertilizer and Chemicals ($) |
4,936.65 |
1,896.94 |
3,582.17 |
Livestock Expenses (?) |
1,860.21 |
1,494.17 |
1,697.10 |
Number of Farms |
107 |
86 |
193 |
TABLE 2. Output Elasticity, Marginal Productivity and Estimates of Relative Allocative Efficiency
Coefficients, Selected Part-Time and Full-Time Farms in West Tennessee
Variable |
PART-TIME FARMS |
FULL-TIME FARMS | ||||||
OUTPUT |
AVERAGE |
MARGINAL |
ALLOCATIVE EFFICIENCY |
OUTPUT |
AVERAGE |
MARGINAL |
ALLOCATIVE | |
a Land (Acres) |
.3332 |
92.35 |
30.77 |
.64 |
.3332 |
151.51 |
50.48 |
1.05 |
Labor (Hours)k |
.3232 |
27.58 |
8.91 |
2.97 |
.3232 |
51.09 |
16.51 |
5.50 |
Capital ($) |
.2170 |
6.44 |
1.40 |
1.40 |
.1125 |
8.06 |
0.91 |
0.91 |
Fertilizer ($) |
-.0183 |
5.74 |
-0.11 |
-0.11 |
.1641 |
6.81 |
1.12 |
1.12 |
Livestock EXP. ($) |
.0786 |
7.28 |
0.57 |
0.57 |
.0279 |
18.07 |
0.50 |
0.50 |
a The average land rent paid by the farmers who rented-in land was $48.18 per acre. Land rent of the sample owner-operated
farms was also calculated at $48.18 per acre.
b The minimum wage rate during 1977, when data were collected, was $2.90 per hour. Adjusting for some skilled farm
machinery operators we have used $3.00 as hourly wage rate in above calculations.
6 Many part-time farmers have beef cattle operations and fertilize their pastures. This fertilizer does not effect agricultural production directly, and, therefore, it may make
measurement difficult, giving the impression that farmers are operating in Stage III of production. This is one possible explanation of the insignificant negative fertilizer
coefficient.
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