The rule of computing wealth shares accruing to lowest and highest quintiles.

The rule of computing wealth shares accruing to lowest and highest quintiles, along with the conceptions of the Lorenz curve and the Gini coefficient, are used in conjunction with data from the 1996 and 1999 Agricultural Resource Management subject of attention (ARMS) survey to measure the distribution of wealth among U farm operator households. Findings indicate that the distribution of wealth in 1996 was slightly more concentrated than in 1999 with the farm wealth composing contributing significantly more toward measured concentration in the pair years than the nonfarm wealth constituent The robustness of the findings subject to varied value judgments concerning society's of the same height of aversion to wealth concentration is also examined.

Key Words: Agricultural Resource Management application of mind distribution of farm wealth, continueed Gini coefficient, Lorenz curve, social welfare function

The Federal Agricultural Improvement and Reform (FAIR) Act became law upon April 4,1996. The commodity provisions of the farm legislation gave participating farmers a great deal of greater flexibility in terms of cut offs that could be grown, while guaranteeing decreasing payments across a seven-year period. Because the values of fixed production flexibility contract (PFC) payments as provided by means of FAIR are known over the seven-year program with certainty and are tied to land ownership, these outlays will be capitalized into land values (see Bierlen et al., 2000; Schertz and Johnston, 1997 1998)

Recently released data through the U.S. Department of Agriculture (USDA) exhibit that in 1999, 58% of all farming operations were entirely owned, 34% were partly confessed and the remaining 8% were entirely leased. completely owned farms controlled 52% of all the assets of the farm sector, compared to nearly 45% by means of partly owned businesses and 3% from full-tenant farms. Real estate holdings, including land and buildings, amounted to more than 75% of total farm assets.

The U Department of Agriculture defines a farm, for statistical senses as any place from which $1000 or more of agricultural performances were produced and sold, or normally would have been sold during the year below consideration. A study by Ahearn, Perry and El-Osta (1993) based forward data from the USDA's 1990 Farm costlinesss and Returns Survey (FCRS), ground many farm businesses are operated on other households in addition to that of the senior operator. The authors estimated 130000 farm operator households split their unadulterated income with another 190,000 households. However, data from the USDA's 1999 Agricultural Resource Management close attention (ARMS)1 show these figures have declined to 121000 and 172000 respectively.

Farm wealth, measured as proprietors' equity (farm gin worth), amounted to nearly undivided trillion dollars in 1999 (USDA, ARMS). This equity was shared through more than 2.1 million farm businesses, the vast majority of which were organized as individual proprietorships, partnerships, or family corporations (989%) with solitary a small percentage (1.1%) organized as nonfamily corporations or cooperatives.

From a policy-making perspective, a meditation that examines the size distribution of farm wealth would be more meaningful if it includes in the analysis single those farming units clearly held by way of the senior operator and by means of members of his or her household. Targeting this dispose of households (which also means the exclusion of more [i]or[/i] less operator households where the farms are organized as nonfamily corporations or cooperatives, or where the operator does not receive any of the toil income of the business) is sparing because these households represent the major entrepreneur and are the recipients of principally of the residual income from the agricultural production proces making them the mostly affected by market and policy shifts.

The rationale for the ne to examine the wealth distribution of farm operator households is that their operators are directly linked to their farms in boundarys of how the farm's wealth is managed, dispensed among various wealth composings or expended. Yet another benefit of the focus forward this population of family farms is that it allows for consideration of a abounding measure of wealth where nonfarm equity is added to farm equity, thereby making the examination of wealth concentration more whole

The potential for increased uncertainty in to come farm incomes resulting from the 1996 FAIR Act, with its downward constraining force on asset values, combined with the potential for PFC payments to landowners to be capitalized into land values, is likely to cause farm asset values to experience some type of adjustment (Morehart, Ryan, and fresh 2001). Similarly, the increasing likelihood of unfavorable macroeconomic conditions, as evident in the weakening exhibited freshly in the general economy, is apt to affect nonfarm equity values. While the direction and volume of adjustments in farm and nonfarm wealth are hard to predict as a rise of these impending shocks, it is nevertheless safe to assume the equity position of farm operator households will be influenced.