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The Relative Cost Efficiency of No-Till Farms

The Relative Cost Efficiency of No-Till Farms. Michael Langemeier Professor Department of Agricultural Economics Kansas State University. Objectives and Data. Examine the relative efficiency of no-till farms in central Kansas. Kansas Farm Management Association (KFMA ) Data

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The Relative Cost Efficiency of No-Till Farms

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  1. The Relative Cost Efficiencyof No-Till Farms • Michael Langemeier • Professor • Department of Agricultural Economics • Kansas State University

  2. Objectives and Data • Examine the relative efficiency of no-till farms in central Kansas. • Kansas Farm Management Association (KFMA ) Data • Continuous data from 2003 to 2007 • To be designated as a no-till farm, a farm had to utilize a no-till production system for all of their crops • Farms categorized into two groups: • No-till (73 farms) • Reduced or conventional tillage (239 farms)

  3. Kansas Farm Management Associations

  4. Definitions • Value of Farm Production • Sum of livestock, crop, and other income computed on an accrual basis minus accrual feed purchased. • Net Farm Income • Return to operator’s labor, management, and equity (net worth) computed on an accrual basis. • Less Tillage Index • Computed by dividing herbicide and insecticide cost by total crop machinery cost which includes repairs, fuel, auto expense, machinery and equipment depreciation, crop machine hire, and an opportunity interest charge on crop machinery and equipment investment.

  5. Definitions • Profit Margin • Computed by dividing net farm income plus cash interest paid minus opportunity charges on operator and family labor by value of farm production. • Asset Turnover Ratio • Computed by dividing value of farm production by total farm assets. • Technical Efficiency Index (ranges from 0 to 1) • Farms with an index of 1 are using the best available technologies and producing on the production frontier. • Cost Efficiency Index (ranges from 0 to 1) • Farms with an index of 1 are producing at the lowest cost per unit of aggregate output.

  6. Comparison of Tillage andNo-Till Farms, Central Kansas

  7. Comparison of Tillage andNo-Till Farms, Central Kansas

  8. Comparison of Tillage andNo-Till Farms, Central Kansas

  9. Comparison of Tillage andNo-Till Farms, Central Kansas

  10. Conclusions • Summary • In addition to having a higher cost efficiency index, the no-till farms were larger, had a higher level of financial performance, produced relatively more feed grains and oilseeds, produced relatively less wheat, and more efficiently utilized their labor and capital inputs. • Implications • Labor utilization • Management • Farm Size

  11. Contact Information • Contributor Site – Langemeier • www.agmanager.info • E-mail • mlange@agecon.ksu.edu

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