Research Accomplishment Reports 2009

Family Firms and Policy

H. Pushkarskaya
Department of Agricultural Economics

 

Non-Technical Summary

Tobacco buyout program caused a structural change in economy of Kentucky This project examines the effect of Tobacco Buyout on i) family businesses ii) and the consequent, indirect effects on communities.

2009 Project Description

Continued to analyze the survey of Kentucky farmers collected in 2005-2006. Attended AAEA annual meeting and annual meeting of the NC-1030 regional group. Started to develop formalism for the Sustainable Family-Business model. Strengthened collaborations with NC-1030 regional group and with researchers from Cornell University.

2009 Impact

In collaboration with Dr. M. Marshall of the Purdue University, Dr. H. Pushkarskaya is investigating the economic impact of the tobacco buyout program on Kentucky tobacco farmers and Kentucky rural communities. Tobacco farmers were expected to transition to other business activities. However, farmers decide individually how they spend their tobacco quota, and their expenditure decision is influenced by their age, education, on and off farm income, and overall lifestyle. Therefore, the composition of the farm population has a significant impact on the outcomes of the tobacco buy-out program on rural communities.

Drs. Pushkarskaya and Marshall also tested predictions of Agricultural Household Model (AHM) and The Sustainable Family Business Model (SFBM) that assume interdependence between adjustment and expenditure choice. The analyses revealed the hypothesized correlations and also demonstrated that SFBM predicts choices of rural households better than AHM. Overall, these results call for the development of the formal model for the Sustainable Business framework. The data also suggests that the decision to exit tobacco farming is largely influenced by the farmer's life cycle. For instance, in collaboration with Dr. Dmitry Vedenov of the Texas A&M University, Dr. H. Pushkarskaya found that the decision to exit tobacco farming in addition to production efficiency and availability of alternative employment is positively correlated with the farmer's tenure, but not the age. Furthermore, for farmers older than 65 the probability to exit tobacco farming decreases as the number of household members involved in farming increases; however the effect of family involvement in farming is not as strong as the effect of the size of the farm.

Together with Dr. Dmitry Vedenov, Dr. H. Pushkarskaya also demonstrated that increasing the availability of the internet in rural areas changes a demographic profile of rural entrepreneurs. In particular, entrepreneurship becomes a more available employment option for married females, but less available for low income population. This stream of research has led to a conference presentation, four papers under review and four published articles.

2009 Publications

Pushkarskaya, Helen, and Maria Marshall. "Lump Sum versus Annuity: Choices of Kentucky Farmers during the Tobacco Buyout Program." Journal of Agricultural and Applied Economics, 41,3 (December 2009): 613-624

Pushkarskaya, Helen and Dmitry Vedenov. "Farming Exit Decision by Age Group: Analysis of Tobacco Buyout Impact in Kentucky." Journal of Agricultural and Applied Economics, 41,3 (December 2009):653-662

Pushkarskaya, Helen and Ellen Usher. "Self-Efficacy for Resolving Environmental Uncertainties Distinguishes Nascent Entrepreneurs from Non Entrepreneurs in Rural Areas." Forthcoming in Journal of Extension. 2010.

Marshall Maria, and Helen Pushkarskaya. "An analysis of tobacco farmer' buyout expenditure choices." Forthcoming in Journal of Agribusiness. 2010.

Pushkarskaya, Helen. "An Analysis of Family Effects on the Kentucky Tobacco Buyout."Presented at Symposium "Integrating the Family into the Business" organized by Dr. Marshall and Dr. George Haynes from Montana State University as part of the ACCI sessions. AAEA/ACCI Joint Annual Meeting, Milwaukee, WI, July, 2009.