Linkage between direct marketing and farm income: a double-hurdle approach

TLDR

The study examines factors influencing farmers’ adoption of direct marketing and its effect on farm gross sales in the U.S. Using a double‑hurdle model on 2002 ARMS data, the authors assess DMS adoption and its impact on farm gross sales. Adoption is higher among organic producers and farms near metropolitan areas, but lower for large farms, contract farms, and cash‑grain specialists; adopters capture a larger share of consumer‑driven sales growth. © 2010 Wiley Periodicals, Inc.; EconLit citations Q120, Q130, Q140.

Abstract

This study identifies factors affecting the adoption of a direct marketing strategy (DMS) by farmers and its impact on the gross sales of farm operations in the United States. The authors use a double-hurdle model and the 2002 Agricultural Resource Management Survey to evaluate empirically the adoption of a DMS and its impact on gross sales of farm operations managed by American farmers. Results suggest that production of organic crops and the regional location of the farm positively affect adoption of a DMS. Adoption of DMS, however, has a negative relation to large farms, farms with production contracts, and farms specializing in cash grains. Farms adopting a DMS are typically those with organic crops and those located in regions with access to a large metropolitan customer base. Our results show that farmers who have adopted a DMS continue to capture a larger proportion of the consumers' dollar increase gross sales than those who have not adopted a DMS. [EconLit citations: Q120; Q130; Q140]. © 2010 Wiley Periodicals, Inc.