This study uses stochastic production frontier (SPF) and DEA frontier methods to estimate the impact of urban influence on the cost of production for traditional corn/soybeans farms in the Southern Seaboard (excepting Virginia and Alabama). We hypothesize that urban influence decreases the technical efficiency of these farms. Although states in this region are not entirely subject to urban influence, some parts of states in this region are highly urbanized. We find that farmers in urban-influenced locations are less technically efficient than farmers in rural locations in the region examined. During 2002-2014, stochastic production frontier and DEA frontier procedures indicate that increasing urban influence leads to a significant decrease in technical efficiency. Our statistical analysis clearly bears out the refrain in popular literature that urban proximity raises the cost for, and decreases the viability of, traditional farms. And seed treatment and pesticide use trends affecting environmental quality (due to old line herbicide applications used to counter weed resistance in GMO crops) suggest the potential for new regulations on farm practices and, hence, costs.
Nehring, Richard F.; Erickson, Kenneth; Harris, James M.; Hallahan, Charlie; Katchova, Ani; and Badau, Flavius
"Impacts of Urbanization on Costs of Production and Land Use in the Central Southern Seaboard: A Farm-Level Analysis,"
Journal of Applied Farm Economics: Vol. 2
, Article 3.
Available at: https://docs.lib.purdue.edu/jafe/vol2/iss2/3