Stochastic Efficiency Analysis of Community-Supported Agruculture Core Management Options

By Sanneh, Njundu; Moffitt, L. Joe et al. | Journal of Agricultural and Resource Economics, December 2001 | Go to article overview

Stochastic Efficiency Analysis of Community-Supported Agruculture Core Management Options


Sanneh, Njundu, Moffitt, L. Joe, Lass, Daniel A., Journal of Agricultural and Resource Economics


The continued decline in both the number of and the acreage in small-scale farms and rural communities, as well as food safety and environmental concerns, has heightened interest in the community-supported agriculture (CSA) concept. Mean-variance, stochastic dominance, mean-Gini, and exponential utility/moment-- generating function approaches to stochastic efficiency are employed to analyze three years of farm survey data on core management options for CSA farms. The core concept yields higher net income per acre than non-core management and, based on the stochastic efficiency analysis, should be regarded as the preferred management option for many CSA operators.

Key words: community-supported agriculture, farm management, stochastic efficiency analysis

Introduction

Community-supported agriculture (CSA), a concept of alternative agriculture (see, e.g., National Research Council; Moffitt), is gaining popularity in the northeastern United States and in the United States at large. The first CSA farming operation in the United States was begun in western Massachusetts during 1984. Today the number of CSA farms in Massachusetts stands at 39, and there are currently more than 1,000 CSA farms in the United States (Van En Center for CSA Resources).

Kelvin loosely defines CSA as a marketing arrangement in which farmers enter into an agreement with a group of local consumers to provide food for their families. Consumers agree to pay in advance for the food; most agreements require payment prior to planting, thereby providing the farmer with cash when it is most needed. Although each CSA operation has its own unique arrangements between farmers and shareholders, the farmer customarily is paid by the shareholders prior to the season for a weekly share of the harvest. CSA is a marketing approach that often brings together producers and consumers who share the same ideology toward food production and the environment. Shareholders in a CSA are generally interested in both the source of their food and the environment.

CSA presents an alternative management option for farmers, especially those operating small farms. A few earlier studies have focused on the economic viability of the CSA concept as a farm management option (Suput; Lass, Rattan, and Sanneh; Kelvin). These studies have typically used enterprise budgets in analyzing the economic viability of existing CSA operations. While the assurance of economic viability is -necessary for CSA to be sustainable, it is also important to keep the objective of many of these operations in perspective. CSAs, like many other "alternative agriculture" operations, historically have been strongly focused on the production of safer produce in an environmentally sensitive manner. In addition, CSAs are distinct in utilizing a marketing concept that places a great deal of emphasis on relations with the consumer. Even so, economic information concerning management options within the CSA concept is of interest to both existing and potential CSA operations.

In this study, we consider two aspects of a CSA farm operator's choice of management strategy. A CSA farm operator either can make all management decisions or can involve a core group of shareholders in the decision making. In a core-group management strategy, a group of shareholders participate in making operational decisions such as crop selection and the price of a share. We use stochastic efficiency analysis to compare net income per acre from core-group managed farms versus CSA farms in which the farmer makes all the decisions.

Background

Most CSAs in the northeastern United States market their shares during the winter months. The growing period and the provision of produce runs from about early May to November. Nearly all CSAs focus on providing a wide range of vegetable crops in their shares. Cooley and Lass reported that the three CSA farms in their study produced more than 70 vegetable and fruit crops. …

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