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Abstract
Agricultural producers operate in a volatile environment, facing a number
of sources of risk. A key question is whether farmers who are more
highly skilled can better mitigate these risks and consistently earn higher
returns than their lower skilled peers. In this article, farm management
performance is analyzed based on yearly Illinois Farm Business Farm Management
(FBFM) panel data across 6,760 farms from 1996 through 2011.
Two out-of-sample measures of skill are used to analyze the ability of farm
managers that consistently perform well over yearly and longer time horizons.
Results suggest that the most skilled managers often generate better
financial results. Furthermore, persistence tests show management skills are
consistent and predictable.