A Typical Farm Series: Development and Application to a Mississippi Delta Farm

Economic analyses of typical farms are often sizes in different regions; (2) the most common useful in applied agricultural research, because mix of enterprises; (3) combinations of capital agricultural policymakers and analysts have a items required for production; and (4) financial particular need for information on policy impacts measures of the economic well-being of farm and indicators of well-being at the farm level. firms. Variables influencing the economic environment Agricultural policy researchers have employed in which farms operate can be identified and their typical farms in determining the impacts of alterimpacts on farming units assessed. This informa- native programs on specific types of farms (U.S. tion is also useful in monitoring the economic Department of Agriculture, 1978a). Typical performance of farms. ERS/USDA has de- farms analyses can also provide information for veloped twenty typical or representative farms descriptive studies concerning the financial whose characteristics are defined in an objective health of farms in the sector (Jensen et al.), and and consistent manner to meet these demands. can measure the efficiency of resource use in a Historically, typical farms have had an intrin- micro-economic environment (Miller et al.). Typsic appeal for comparative-static analyses and for ical farms are of limited use in determining descriptive reports. If properly specified, the use aggregate impacts of different policies and proof composite farms can save research resources grams. and permit inductive research for a wider range The most recent set of typical farms developed of farms. The specification of a typical farm is by the U.S. Department of Agriculture was for not an easy task, and is often associated with the the 1976 crop year (Strickland and Fawcett). concept of a mean or a mode. For example, an Data on the farms were not widely distributed average farm size would represent the mean of all and were used mainly for internal research in the farms in the population, but would not necessar- department. The limited use of early department ily be a close approximation of any specific typical farm data resulted from a number of farms. An alternative is to define the typical problems-principally, the lack of a consistent farms so that they approximate the greatest procedure to define the farms across regions, and number of real farms. This can be accomplished the lack of a data source that would provide deby choosing modal intervals from marginal dis- tailed information on sizes of farms and mixes of tributions of the decision criteria variables. enterprises. This paper discusses (1) the role of typical Recent improvements in ERS access to census farms in agricultural research; (2) specifies the data provided the incentive to develop a stanprocedure used in developing the farms; (3) pre- dardized procedure to define the physical characsents preliminary descriptions of farm sizes and teristics of typical farms and to derive associated enterprise mixes for twenty farms; and (4) pre- costs and price information. These improvesents 1980 financial information for the Missis- ments have made the new set of typical farms a sippi Delta cotton-soybean farm. Costs and re- more defensible source of data for agricultural turns, and an analysis of the impacts of alterna- research. tive product prices and yields on the well-being of the farm are included.