Agriculture Reference

In-Depth Information

Table 7.2

Definition of variables

Dependent variables

CONTRACT

=

1 if contract was a cropshare contract;=0ifacash rent contract.

SHARE-UP

=

1 if share term was increased in the last five years;=0ifnot.

Independent variables

ACRES

=

number of acres covered by contract.

AGE

=

1 if farmer is younger than 25,

=

2 if 25-34 years old,

=

3 if 35-44 years old,

=

4 if 45-54 years old,

=

5 if 55-64 years old,

=

6 if older than 65 (for Nebraska and South Dakota).

DENSITY

=

population per square mile in the county of farm operation.

FAMILY

=

1 if landowner and farmer were related; = 0 otherwise.

HAY

=

1 if hay or other grass crops were the major income producing crops;

=

0 otherwise.

INPUTS CHANGED

=

1 if share of inputs changed in past five years;

=

0 if there was no change.

IRRIGATED

=

1 if land is irrigated;=0ifdryland.

NEW FARMER

=

1 if farmer is new within five years;

=

0 if farmer has not changed.

NEW LAND OWNER

=

1 if land owner is new within five years;

=

0 if landowner has not changed.

ROW CROP

=

1 if row crop (corn, sugar beets, sugarcane, soybeans, sorghum);

=

0 if not a row crop (wheat, oats, barley).

YEARS DURATION

=

number of years contract has been in place.

the ratchet effect model. In particular, the data contain information on the history of tenant

farmers over the five years prior to the survey. This is the critical piece of information that

allows us to test the predictions from a model with ratchet effects because we know whether

or not there has been a change in the tenant farmer or the landowner. In our empirical analysis

the two periods in our theoretical model correspond to the periods with the old (period 1)

and new farmer (period 2).

We use these data to test the predictions of our model by estimating the effect of new

farmers and landowners on contract choices and on the terms of cropshare leases. Once

again, we use the following empirical specification:

C
i
=
X
i
β
i
+
i
i
=

1,

...

,

n

;

and

(7.8)

1,

C
i
>

if

0

C
i
=

(7.9)

C
i
≤

0,

if

0,