Dynamics of Structural Change in the Ontario Hog Industry

Abstract

Farm size distribution dynamics for hog production in Ontario are analyzed, using stationary and nonstationary transition probability models. Both models predict that there will be approximately 60% fewer hog producers in Ontario by the turn of the century than at the beginning of 1990. The three exogenous variables used in the nonstationary modelshog/corn price ratio, interest rate and labor/capital price ratioare shown to have some effect on the transition dynamics, although the major effect appears to be from a combination of technological advancements and improvements in human capital. The effect of the exogenous policy variables on the probability of transition to a given size is generally limited to the interaction between the inactive farmers and the smallest classes. Poor prices tend to increase the exodus of farmers from the industry, with most of those leaving being smaller producers.La dynamique de la distribution des tailles des exploitations porcines en Ontario est analysCe au moyen des modbles de probabilitd de transition fixes et mobiles. Les deux modkles arrivent B la prediction qu'au tournant du sikcle, il y aura quelque 60% de moins de producteurs de porcs qu'au commencement de la dCcennie 1990. Les trois variables exogbnes utiliskes dans les modbles mobiles, soit le rapport de prix porc/mais, le taux d'intCrCt et le rapport de prix travail/capital, manifestaient un certain effet sur la dynamique de la transition, bien que I'effet dominant semble &tre celui de la combinaison du progrks technologique et de I'amClioration de la main-d'oeuvre. L'effet des variables de politique exoghes sur la probabilitk d'atteindre une taille donnee se limitait gCnCralement B I'interaction entre les exploitants non actifs et les petits producteurs de porcs. La mediocrite des prix tend B accelerer I'exode des producteurs, surtout dans les catkgories des petits producteurs.

Information-based estimators for the non-stationary transition probability matrix: an application to the Danish pork industry

“…The pork farm distribution typifies similar trends in pork industry elsewhere (Massow, et al, 1992;Disney, et al, 1988), as well as the general trend in the farm sector (Evans, 1988b). The total number of farms has decreased from 46,094 to 17,689 between 1984-1998 (a 61.2% decrease).…”

“…The interest rate size elasticities are positive for categories 15-17 and negative for the largest category 18. One possible explanation thatMassow et al (1992) give for a similar result, is that the largest farms may downsize due to high interest rates, which increases the sizes of the immediately lower…”

“…Traditional estimation techniques fail, or require strong restrictions, because the estimated 1 Evans, 1987b, and the accompanying papers at the symposium on "Empirical analysis of size distribution of farms" 2 See for example Evans, 1987a for a review 3 Lee et al (1977) provide a partial literature list for general Markov studies; Zepeda (1995a&b) also provide a more recent list of mainly agriculture related Markov studies. 4 See for example Adelman 1958;Padberg 1962;Lee et al, 1977, Oustapassidis, 1986 See for example Lee, et al, 1977;Disney, et al, 1988;Massow, et al, 1992;Zepeda, 1996a,b, and their cited references.…”

Dynamics of farm entry and exit in Canada

“…Higher net farm income is hypothesized to increase the entry rate and slow the exodus from farming (i.e., von Massow et al 1992; Gale 1993; Mishra, Fannin, and Joo 2014). Farm characteristic variables include farm size (farmland area), capital, sales, and farm type.…”

“…However, these studies have limitations on the extent of analysis either in terms of sector or time frame or focus. Several of the studies are for only one sector (i.e., von Massow, Weersink, and Turvey 1992; Zepeda 1995; Dong et al 2016), while others are limited by the time frame for the analysis. Kimhi and Bollman (1999) used the 1966 and 1971 Canadian census to study exit only, and a single period of the USDA's ARMS data set was used by Mishra, Fannin, and Joo (2014) and Dong et al (2016), which limits the impact of changes over time.…”