Off-Farm Work and Economic Performance on Corn Farms

This paper examines the effect of off-farm work on the economic performance of corn farms. It estimates returns to scale and technical efficiency following an input distance function approach and compares the relative performance of corn farm operator households with and without off-farm work. We use farm-level data from the USDA’s ARMS survey for 2002-2011. The impact of off-farm work on scale and technical efficiency is examined at the household level. We find that off-farm income boosts scale efficiency on corn farms. We also find that operator hours worked off farm negatively affects technical efficiency, while we find no impact on technical efficiency for spouse hours worked off farm. Finally, we find that corn farms relying on off farm income have comparable returns on farm assets across all size classes, but significantly higher household returns (with off-farm income and assets accounted for) across all size classes.