Aggregate and farm-level productivity growth in tobacco: Before and after the quota buyout

Barrett E. Kirwan, Shinsuke Uchida, T. Kirk White

Research output: Contribution to journalArticlepeer-review

Abstract

We examine the distortionary effects of agricultural policy on farm productivity by examining the response of U.S. tobacco farmers' productivity to the quota buyout of 2004. We focus on the impact of distortionary policy, i.e., the tobacco quota, by decomposing aggregate productivity growth into the contribution of farm-level productivity growth and the contribution of reallocation of resources among tobacco growers. We find that the aggregate productivity of Kentucky tobacco farms grew44%between 2002 and 2007. The elimination of quota rental costs and reallocation of resources, including entry and exit, accounted for most of the post-buyout productivity growth.

Original languageEnglish (US)
Pages (from-to)838-853
Number of pages16
JournalAmerican Journal of Agricultural Economics
Volume94
Issue number4
DOIs
StatePublished - Jul 2012

Keywords

  • Tobacco; Quotas; Aggregate Productivity Growth; Reallocation

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics

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