1 The Role of Community and Farm Characteristics in Farm Input Purchasing Patterns Forthcoming, Review of Agricultural Economics, Winter, 2005

This work uses unique data from three dairy-dependent communities in rural Wisconsin to test established theory and empirical studies that link farm structure to local purchasing patterns. A theoretical model of purchasing choices is developed to derive the demand determinants of local purchasing. This model is tested empirically across eleven major dairy farm inputs using a double-bounded Tobit model that also includes community characteristics. The empirical estimations find little support for a general linkage between farm-level characteristics and local purchasing patterns. The results do suggest that different community characteristics provide some explanations for diverse purchasing patterns. Walter Goldschmidt’s (1946) widely cited but contentious finding that farm size was the most important cause of socio-economic differences in two rural communities in California, has provoked more than a half a century of research analyzing the relationship between farm structure and rural economic development (e.g., Gilles and Dalecki; Heady and Sonka; Lasley et al.; Strange; Zeuli and Deller). Testing Goldschmidt’s premise that smaller farms purchase a greater share of their inputs locally, and thus provide a