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This study empirically investigates the impacts of crop specialization on farm performance in Korea. A census data set of about 230,000 crop-producing farms is used, and the crop diversities within farms (α-diversity), among farms (β-diversity), and of the regions (γ-diversity) were measured for the analysis. The regional diversity (γ) is partitioned into the average diversity within farms (α) and among farms (β). Our estimation results of the interval regression model show that both individual and regional specializations contribute to farm performance. That is, individual farm revenue decreases both in the α and γ diversities but increases in the β diversity when controlled by the farm input usages, farm household characteristics, and regional socio-economic-climate conditions. It is also found that farms choosing crop selections similar to those of their regions tend to achieve higher performance. We confirm the existence of the gains from specializations by estimating a propensity score model with a continuous treatment as well. We insist that our findings are quite consistent with the observed trends, specializing in a small number of crops despite the potential gains from diversification.
Oh Sang Kwon (Sat,) studied this question.