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Abstract
This article investigates the sources of profitability and productivity change at the farm level with an
application to a group of 252 farms in Kansas over an 18 years period, from 1993 to 2010. The
Lowe index method is used to compute changes in total factor productivity (TFP) and terms of trade
(TT). Nonparametric data envelopment analysis is used to decompose TFP into technical change
and different measures of output oriented efficiency change. Profitability change is mainly driven by
TFP change. The main source of TFP change is technical progress. The upward shifting efficiency
frontier results in declining technical efficiency. Both profitability and productivity vary by farm
size and specialization. Results point for the need to support research and development without
ignoring efforts to encourage uptake of existing technologies.