Degree Name
Master of Science
Graduate Program
Agribusiness Economics
Advisor
Asirvatham, Jebaraj
Abstract
Over the past twenty years, Illinois agriculture has witnessed periods of high volatility in commodity and input prices. This has tightened net farm income in some years while yielding the highest Illinois net farm incomes ever seen in others. Given this volatility and developments in agriculture that favor the most efficient farms, it is important to understand what makes an Illinois farm profitable. This research aims to examine how different categories of operating costs determine economic profit per acre in Central and Southern Illinois. If operating costs differentially affect economic profit in these regions, examining those relationships would facilitate decisions specific to each region. Once the distinctions between these regions can be identified, we can instruct farm managers to concentrate on the best practices unique to each region that may help them succeed, and Illinois can embrace changes in the agriculture industry. Using financial and economic data from Farm Business Farm Management (FBFM), we uncover that the best-performing farms in Southern Illinois produce more economic profit per farm than the best-performing farms in Central Illinois, while Central Illinois farms are more profitable per acre. We also conclude that in aggregate, Southern Illinois farms tend to be more efficient in using their resources to maximize economic profits per acre, but because of the uneven distribution of soil fertility Central Illinois farms make more economic profits per acre with less efficient practices.