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Do Profitable Farms Remain Profitable? Transition Probabilities Using Markov Switching Models Applied To Kansas Farm Data, Jayce S. Stabel, Terry Griffin, Greg Ibendahl
Do Profitable Farms Remain Profitable? Transition Probabilities Using Markov Switching Models Applied To Kansas Farm Data, Jayce S. Stabel, Terry Griffin, Greg Ibendahl
Journal of Applied Farm Economics
Financial vulnerability has been observed across agricultural production regions; however, uncertainty regarding farms’ persistence within specific profitability categories exists. This study compared farm characteristics that persist in most and least profitable categories and then evaluated the probability that farms transitioned among profitability categories. Using 425 Kansas Farm Management Association (KFMA) farms that were present for the 20-year period 1994–2013, the persistence of remaining or transitioning to another profitability category was tested. Specifically, Markov transition probabilities were estimated for Kansas and the six regional KFMA regions. Comparisons of farms that persist in the highest and lowest profitability categories revealed no dramatic …