Farm Size Evaluation in the El Paso Valley: A Survival/Success Approach

Policy makers and agricultural economists in the United States have long been interested in the effects of size on farm survival and success. Most farm size studies to date have concentrated on economic efficiency and have failed to incorporate the effects of uncertainty, time, income taxes, financial considerations, and variation in year‐to‐year net cash flows on the survival/success of different size farms. A dynamic Monte‐Carlo simulation‐programming model was developed and used to analyze the projected survival/success of four alternative farm sizes for the El Paso Valley. For farms in the El Paso Valley, the projected chances of survival and success increase as farm size increases from 160 to 960 acres and/or beginning equity level increases from 25% to 100%.