Characterizing US dairy farm income and wealth distributions

Abstract

Purpose The structural change of the dairy industry has been a long-term process with fewer, larger dairy herds in all regions. The purpose of this paper is to evaluate whether this structural change is leading to less income and wealth equality across dairy farms and how these factors differ across the USA. Design/methodology/approach Income and wealth inequality of US dairy farms was estimated by Gini coefficients using data from the 2000 and 2010 ARMS dairy costs and returns data. A population-level quantile regression was estimated at decile increments to determine the factors that affect net farm income (NFI) and net worth (NETW) and if they changed across the time periods. Findings Adjusted-Gini coefficients were estimated and indicated that income inequality was greater than wealth inequality across US dairy farms. Results of the quantile regressions confirm regional differences exist with dairy farms in Mountain regions consistently having lower NFI and NETW relative to farms in the Lake States region when factors such as herd size were equal. Life cycle effects were not observed for NFI, but present within NETW estimates across the ten years. Originality/value This analysis estimates industry-specific-adjusted Gini coefficients to determine if income and wealth inequality exist.