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Testing the impact of corporate farming restrictions on the Nebraska hog industry

Holger Matthey, University of Nebraska - Lincoln

Abstract

This dissertation evaluates the implications of corporate restrictions on production agriculture using the case of Nebraska. Corporate farming restrictions were enacted as an amendment to the Nebraska constitution. In Nebraska, they prohibit the acquisition or operation of agricultural land by nonfamily farm or ranch corporations and syndicates, including limited partnerships. This study analyzes the effect of these restrictions on the Nebraska hog industry. ^ This dissertation tests the hypothesis that the elimination of the corporate organizational option in Nebraska reduces the ability of the hog industry to adapt its inventory to changes in market conditions. Larger firms in particular may need to operate as corporations to acquire adequate amounts of growth capital. Without this option, growth of the hog industry in Nebraska may be decreased. ^ A partial adjustment model with a variable coefficient of adjustment is used to test this hypothesis. It is controlled by a dummy variable for the time periods when the restrictions are in effect. The adjustment toward the desired value of hog inventory in Nebraska before 1982 is compared to values estimated for periods after 1982 using observations from 1974 to 1996. The results show a significant reduction in the adjustment speed of the total inventory in 1983. ^ A second partial adjustment model is introduced that accounts for asymmetric adjustment of inventory. To analyze the impact of Initiative 300 on the breeding and market stock separately, a third model is created. It specifies separate equations for breeding and market stock. Furthermore, two seemingly unrelated regression models are developed that compare Nebraska's hog industry to other states' hog industries. ^ Summarizing the results, it can be stated that the distinct response of the Nebraska hog industry to changes in the market conditions is leading to the conclusion that Initiative 300 is an important determinant of the industry's development. However, it is not the only cause of the behavioral changes of the industry, the observed changes are partially due to other factors influencing Nebraska's hog industry. ^

Subject Area

Economics, Agricultural|Political Science, Public Administration

Recommended Citation

Matthey, Holger, "Testing the impact of corporate farming restrictions on the Nebraska hog industry" (2000). ETD collection for University of Nebraska - Lincoln. AAI9962064.
http://digitalcommons.unl.edu/dissertations/AAI9962064

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