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Abstract
We examine whether there are spatial relationships in U.S. production agriculture's profitability
across regions and over time. We test the traditional view that factor markets (approximately)
adjust to equalize agriculture's net returns over space and time using county-level data from the
USDA's Census of Agriculture, 1992 and 1997. We estimate Gini coefficients and calculate the
Theil Entropy Measure (TMI) to examine changes in the concentration of returns over space and
time, and to decompose the variation in inequality in returns into two components: the percent of
total variation in returns due to within-region inequality, and the percent of variation in returns
due to between-region variation in returns. Although factor markets (approximately) adjust to
equalize net returns over space and time, there is still considerable variability in returns within
regions and within states. Use of county-level (Census of Agriculture) and farm-level data
(ARMS Survey) to help highlight these differences. In general, farm-level Gini coefficients have
remained fairly constant but show a mild increase in concentration since the 1996 FAIR Act.
The TMI analysis reveals that in 1997 about 54 percent of the variation in total returns (net cash
returns) was due to within-region variation, and about 46 percent was due to (average) between region
variation (compared to 53 and 47 percent in 1992). Total U.S. inequality of net cash
returns increased from 0.14 in 1992 to 0.21 in 1997.