IMPROVING FARM MANAGEMENT DECISIONS BY ANALYZING PRODUCTION EXPENDITURE ALLOCATIONS AND FARM PERFORMANCE STANDING

This study examines the potential effects of categorical increases in production expenditures on farm income performance according to farm standing. The objective of this study is to expose differences in anticipated net farm income return from production expenditure investments and the optimal expense allocation strategy for each performance level. Studying farm performance through segregation by utilizing a two-tier analysis and quantile regression acknowledges the possibility that managerial strategy can differ based on managerial ability. Study outcomes are useful to farm managers because they offer more prescription style results and interpretations than found in other farm performance studies. Study findings show that as managerial proficiency increases so does a manager’s ability to extract higher returns from additional expenditures in certain input categories. Additionally, better managers are able to produce higher returns from more investment sources than their lower performing peers. Overall, study results and interpretations point to the importance of farm management ability as the key input for improving farm performance