Typical Farm Theory in Agricultural Research

Economists, farm managers, financial advisors and policy makers frequently need to conduct farm level analyses. There is a continual need to evaluate changing technologies, government farm program effects, and changing market conditions at the farm level. The implications of changing financial conditions, policy options or technological alternatives must be understood at the farm level for educational programs to be designed or for necessary policy incentives to be offered to achieve the desired income support, supply response, or shifts in resource use. When conducting farm level research, one is always faced with difficult decisions concerning the type of data on which to base the analysis. Frequently there are only a few options available: 1) collect individual data from a farm or a sample of farms to be analyzed; 2) use aggregate state or regionally reported data; or 3) use synthetic farms, often referred to as the economic-engineering approach. Each of these options has its advantages and disadvantages