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dissertation entitled

FARM AND RANCH DIVERSIFICATION:
A STRATEGY FOR CONFRONTING
THE CHANGING AGRICULTURAL CONTEXT IN TEXAS

presented by

CARLA ELIANA BARBIERI

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Ph.D. degree in Department of Parks, Recreation
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FARM AND RANCH DIVERSIFICATION:
A STRATEGY FOR CONFRONTING
THE CHANGING AGRICULTURAL CONTEXT IN TEXAS
By

Carla Eliana Barbieri

A DISSERTATION

Submitted to
Michigan State University
in partial fulfillment of the requirements
for the degree of

DOCTOR OF PHILOSOPHY
Department of Parks, Recreation and Tourism Resources

2006

ABSTRACT
FARM AND RANCH DIVERSIFICATION: A STRATEGY FOR

CONFRONTING THE CHANGING AGRICULTURAL CONTEXT IN TEXAS

By

Carla Eliana Barbieri

A goal-directed behavior model, based on the central actor role of farmers in
decision-making processes, was used to assess the success of agriculture diversiﬁcation
in Texas. Success was deﬁned as the satisfaction with the extent to which diversiﬁcation
has achieved various goals, both personal and extrinsic, that initially motivated farmers to

diversify their farms.

A range of goals, both ﬁnancial and non-ﬁnancial, were found to be important in
farmers’ decisions to diversify. The diversiﬁcation goals that were found to be more
ﬁequent and more important were: the generation of additional income; the continuance

of farming and ranching; and the enhancement of quality of life.

A principal component factor analysis of importance ratings of diversiﬁcation
goals resulted in six dimensions. 1) Reduce Uncertainty and Risk (F1) comprised goals
that are related to the insecurity inherent to farming. 2) Grow and Service Markets (F2) ‘
comprised those goals that are associated with retaining and expanding markets. 3)
Enhanced Financial Condition (F3) included goals associated with the ﬁnancial
wellbeing of farm and ranch businesses. 4) Individual Aspirations and Pursuits (F4)

comprised goals that are personal in nature. 5) Revenues Enhancement (F5) included

goals related to the generation of additional income. 6) Family Connections (F6) was

related to goals that strengthens the liaison of the farm household to the farm.

When investigating the level of accomplishment of diversiﬁcation goals, it was
found that diversiﬁcation is a successful strategy. From the subjective perspective (i.e.,
farmers perception), there is a high level of perceived accomplishment among farmers
and ranchers of the important goals that inﬂuenced them to diversify. The goals
comprising the Family Connection Factor (8. 38), the Personal Aspiration and Pursuits
Factor (7. 91) and Reducing Uncertainty and Risk Factor (7.38) are the most important
in the decision to diversify and the most achieved ones. The Enhanced Financial

Condition is the factor that has the lowest importance-achievement score (6.73).

Actual measurement of diversiﬁcation performance showed a positive impact of
diversiﬁcation on farm gross revenues, proﬁts, amount of debt and labor. On average,
diversiﬁed operations contribute over twenty percent (21.5%) of the total farm revenues.
The majority (69.1%) of the diversiﬁers (69.1%) had an increase of their proﬁts after
diversifying their operations, reporting an average increase of 45.1%. There is some
positive impact of diversiﬁcation on farm debt, resulting in an overall debt decrease of
2.4%. On average, diversiﬁers estimate that diversiﬁcation has created jobs for more

than six employees (6.4) and provides one (0.9) employment opportunity for a family.

This study concludes that diversiﬁcation accomplishes various economic and non-
economic goals that inspired farmers and ranchers to incorporate new enterprises into
their farms. The multi-motivational dimension behind diversiﬁcation suggests that this
strategy should not be solely recognized for its economic values but also for non-

economic values that it brings to farmers and local communities.

To my husband, J osé, and my sons, Bartolomé and Cristobal, for their constant support
along this journey

To my parents, Alberto and Lucy, for their guidance throughout my life

iv

ACKNOWLEDGEMENTS

I wish to express my sincere appreciation to my advisor Dr. Edward Mahoney for
his guidance during my graduate studies and his efforts to help me build my career. I
also thank Drs. Scott Witter, Toby TenEyck and John Kerr, members of my committee,
for their advice, support and their timely response throughout my studies.

I also want to thank Dr. Jim Bristor who dedicated countless hours coaching my
writings. Many thanks also to other faculty and staff of the Department of Community,
Agriculture, Recreation and Resource Studies who in one way or another helped me
during my studies. Special thanks go to Tanya Stock, who was always there supporting

my research and work.

TABLE OF CONTENTS

LIST OF TABLES ............................................................................................................ IX
LIST OF FIGURES ........................................................................................................ XIII
CHAPTER I - INTRODUCTION ...................................................................................... 1
1.1 THE CURRENT AGRICULTURAL CONTEXT ............................................................... 1
Restructuring Strategies to Face the Current Agricultural Context ..................... 5
Overview of Texas Agriculture Context ............................................................ 10
1.2 AGRICULTURE DIVERSIFICATION — A PROPOSED MODEL ...................................... 14
Some Observed Attributes of Agriculture Diversiﬁcation ................................ 19
1.3 PROBLEM STATEMENT ........................................................................................... 24
1.4 OBJECTIVES, RESEARCH QUESTIONS AND HYPOTHESIS ......................................... 28
Study Objectives ................................................................................................ 29
1.5 DEFINITION OF TERMS ........................................................................................... 33
1.6 ORGANIZATION OF THE DISSERTATION .................................................................. 34
CHAPTER II -— LITERATURE REVIEW ....................................................................... 36
2.1 FARM AND RANCH DIVERSIFICATION .................................................................... 36
Categories within Farm Diversiﬁcation ............................................................. 4O
Attributes Associated with Farm Diversiﬁcation .............................................. 45

2.2 THE ROLES OF GOALS IN FARM DIVERSIFICATION DECISIONS: A THEORETICAL
APPROACH ............................................................................................................. 53
The Role of Goals in the Diversiﬁcation Decision-Making Process ................. 54
The Role of Goals in the Diversiﬁcation Performance ...................................... 55
2.3 GOALS BEHIND ENTREPRENEURSHIP AND DIVERSIFICATION ................................. 57
Relevant Goals behind Farm Diversiﬁers .......................................................... 61
Existing Classiﬁcations of Farm Diversiﬁcation Goals .................................... 64
Attributes Associated with Farm Diversiﬁcation Goals .................................... 66
2.4 PREVIOUS STUDIES ASSESSING THE SUCCESS OF FARM DIVERSIFICATION ............ 67
CHAPTER III - RESEARCH METHODS ...................................................................... 71
3.1 WEB-BASED DATA-DRIVEN TEXAS AGRICULTURE DIVERSIFICATION SURVEY ..... 71
The Convenience of an On-line Survey ............................................................. 71
The Advantages of a Data-driven Survey .......................................................... 73
Instrument Desi grr .............................................................................................. 75
Revision and Pre-Test ........................................................................................ 81
3.2 IDENTIFYING DIVERSIFIED FARMS AND RANCHES IN TEXAS .................................. 82

Vi

3.3 SURVEY ADMINISTRATION .................................................................................... 84
3.4 RESPONSE RATE AND DATA PREPARATION ............................................................ 87

CHAPTER IV -— AN OVERVIEW OF AGRICULTURE DIVERSIFICATION IN

TEXAS .................................................................................................................. 91

4.1 PROFILE OF THE TEXAS DIVERSIFIED FARMERS AND RANCHERS ........................... 91
Socio-economic Proﬁle ...................................................................................... 91
Diversiﬁed Farm and Ranch Attachment to Farming ........................................ 93
Diversiﬁed Farm Family Characteristics ........................................................... 95

Role of Spouses in Diversiﬁed Farm Operations .............................................. 96
Extent of Farming Experience ........................................................................... 97

4.2 CHARACTERISTICS OF THE DIVERSIFIED FARMS AND RANCHES ............................. 98
Farm Size ........................................................................................................... 98

Farm Location .................................................................................................. 101
Agriculture Production and Practices .............................................................. 102

Farm Organizational Structure ......................................................................... 105
Marketing and Managerial Structure ............................................................... 105

4.3 VALIDATION OF THE CONCEPTUAL MODEL OF AGRICULTURE DIVERSIFICATION 108
The Agriculture Diversiﬁcation Model ........................................................... 109
Enterprise-lines ................................................................................................ 1 15
Dynamic Diversiﬁcation .................................................................................. 119

CHAPTER V — GOALS AND SUCCESS BEHIND AGRICULTURE

DIVERSIFICATION .......................................................................................... 1 24

5.1 REASONS WHY FARMERS AND RANCHERS DIVERSIFY THEIR ENTERPRISES ........ 125
5.2 UNDERLYING PATTERNS OF ASSOCIATION AMONG DIVERSIFICATION GOALS ..... 128
Signiﬁcant Differences in the Importance Assessment of Goals by Factors... 132

5.3 FARM DIVERSIFICATION ASSESSMENT — THE FARMERS, PERSPECTIVE ............... I44
Accomplishment of Diversiﬁcation Goals ...................................................... 147
Signiﬁcant Differences in the Accomplishment of Goals ............................... 152

5.4 AN OBJECTIVE ASSESSMENT OF DIVERSIFICATION .............................................. 158
5.5 A HOLISTIC FARM DIVERSIFICATION ASSESSMENT - FAILURE OR SUCCESS ........ 166
CHAPTER VI — SUMMARY AND CONCLUSIONS .................................................. 170
6.1 SUMMARY OF MAJOR FINDINGS .......................................................................... 171
The Conceptual Model of Agriculture Diversiﬁcation .................................... 172

Goals that Encourage Agriculture Diversiﬁcation ........................................... 174
Accomplishment of Diversiﬁcation Goals ...................................................... 175
Objective Indicators of Diversiﬁcation Accomplishment ............................... 178

A Holistic Assessment of Farm and Ranch Diversiﬁcation ............................ 179

6.2 IMPLICATIONS AND APPLICATIONS OF THE STUDY RESULTS ................................ 180
6.3 STUDY LIMITATIONS ............................................................................................ 185

Vii

6.4 RECOMMENDATIONS ............................................................................................ 187

BIBLIOGRAPHY ........................................................................................................... 194
APPENDIX A ................................................................................................................. 199
APPENDIX B ................................................................................................................. 200
APPENDIX C ................................................................................................................. 201
APPENDIX D ................................................................................................................. 202
APPENDIX E ................................................................................................................. 203

viii

TABLE 2.1

TABLE 2.2

TABLE 3.1

TABLE 3.2

TABLE 3.3

TABLE 3.4

TABLE 3.5

TABLE 4.1

TABLE 4.2

TABLE 4.3

TABLE 4.4

TABLE 4.5

TABLE 4.6

TABLE 4.7

TABLE 4.8

LIST OF TABLES

Summary of the several correlations found among farm, farmer/farm
household and environmental attributes and farm diversiﬁcation and
types of diversiﬁcation ....................................................................... ~ .......... 53

Summary of the several start-up goals tested behind entrepreneurship and
farm diversiﬁcation. ..................................................................................... 64

Number of response categories by types of agricultural product/services
categories. .................................................................................................... 79

Dates of communications sent to participants by types of communication

and waves. .................................................................................................... 85
Number of useable e-mails. ......................................................................... 87
Response rate by type of electronic communication. .................................. 88
Number of useable and excluded cases by reasons for exclusion. .............. 90

Socio-economic characteristics of Texas diversiﬁed farmers and ranchers
compared to all Texas farmers and ranchers demographics. ....................... 92

Level of Attachment of Texas diversiﬁed farmers and ranchers families
to their farms and ranches. ........................................................................... 94

Characteristics of diversiﬁed Texas farm/ranch families. ........................... 96

Activities that diversiﬁed farmer/rancher’s Spouses perform and the
amount off farm/ranch work days. ............................................................... 97

Extent of farming/ranching and diversiﬁcation experiences of diversiﬁed
farmers and ranchers and their educational background. ............................ 98

The size, and gross sales revenues of diversiﬁed farms and ranches and
all Texas farms and ranches. ...................................................................... 100

Number and types of employees on Texas diversiﬁed farms and ranches. 101

Distances diversiﬁed farms and ranches are located ﬁom a paved
highway, urban clusters and urbanized areas ............................................. 102

ix

TABLE 4.9

TABLE 4.10

TABLE 4.11

TABLE 4.12

TABLE 4.13

TABLE 4.14

TABLE 4.15

TABLE 4.16

TABLE 4.17

TABLE 4.18

TABLE 4.19

TABLE 4.20

TABLE 4.21

TABLE 5.1

TABLE 5.2

TABLE 5.3

TABLE 5.4

Commonly raised/ grown agriculture products by Texas diversiﬁed farms
and ranches. ............................................................................................... 103

Environment-ﬁiendly and stewardship farming/ranching practices on
diversiﬁed farms and ranches. ................................................................... 104

Organization structure, decision-maker and tenure structure of diversiﬁed
farms and ranches in Texas ........................................................................ 106

Availability of business/marketing plans, association membership and
marketing methods employed by Texas diversiﬁed farms and ranches. 107

Types of product distribution channels employed by Texas diversiﬁed
farmers and ranchers. ................................................................................. 108

Categories of On-farm/ranch diversiﬁcation, diversiﬁcation index
categories, and extent of diversiﬁcation segments. ................................... 110

A comparison of operating characteristics and stewardship practices of
light, moderately and highly diversiﬁed farmers and ranchers. ................ 113

Different measures of the extent of farm and ranch diversiﬁcation. ......... 116

Diversiﬁed categories and diversiﬁed enterprise-lines on Texas diversiﬁed
farms and ranches. ..................................................................................... 118

Pace and timing of development of diversiﬁed enterprises. ...................... 119

Percentage of farmers and ranchers planning additional diversiﬁcation
and the categories of diversiﬁcation they are expecting to incorporate. 120

A comparison of farm/ranch characteristics of those planning and not
planning further diversiﬁcation. ................................................................ 122

A comparison of future expansion planned by farmers not engaged in
AgriTourism and those engaged in AgriTourism. ..................................... 123

Percentage of respondents who considered different goals to be important
reasons for diversifying their farms and ranches. ...................................... 125

Percentage of respondents who considered different goals as important in
the preservation of cultural objects and heritage. ...................................... 126

Level of importance of different farm and ranch diversiﬁcation goals. 127

Rotated factor matrix of the goals for farm and ranch diversiﬁcation ....... 130

TABLE 5.5

TABLE 5.6

TABLE 5.7

TABLE 5.8

TABLE 5.9

TABLE 5.10

TABLE 5.1 1

TABLE 5.12

TABLE 5.13

TABLE 5.14

TABLE 5.15

TABLE 5.16

TABLE 5.17

TABLE 5.18

Differences in the importance assessment of goals loaded in the Reduce
Uncertainty and Risk factor (F1) by farm characteristics, farmer proﬁle
and extent of diversiﬁcation. ..................................................................... 133

Differences in the importance assessment of goals loaded in the Grow and
Service Markets factor (F 2) by farm characteristics, farmer proﬁle and
extent of diversiﬁcation. ............................................................................ 136

Differences in the importance assessment of goals loaded in the Enhanced
Financial Condition factor (F3) by farm characteristics, farmer proﬁle
and extent of diversiﬁcation. ..................................................................... 138

Differences in the importance assessment of goals loaded in the Personal
Aspirations and Pursuits factor (F 4) by farm characteristics, farmer

proﬁle and extent of diversiﬁcation. .............................................. 140
Differences in the importance assessment of goals loaded in the Revenue
Enhancement factor (F5) by farm characteristics, farmer proﬁle and

extent of Diversiﬁcation. ........................................................................... 142
Differences in the importance assessment of goals loaded in the Family
Connection factor (F6) by farm characteristics, farmer proﬁle and extent

of diversiﬁcation. ....................................................................................... 143

Percentages of farmers and ranchers who would decide again to diversify
and recommend diversiﬁcation to other farmers and ranchers. ................. 144

Level of achievement of different diversiﬁcation goals. ........................... 147

Importance-Achievement Index for the goals comprising the six
diversiﬁcation goal factors ......................................................................... 151

Proportion of diversiﬁcation goals accomplished segments ...................... 153

Signiﬁcant differences in the proportion of goals accomplished by farm
characteristics, farmer proﬁle and extent of diversiﬁcation. ..................... 154

Importance-Accomplishment score segments. ........................................... 155

Signiﬁcant differences in the Importance-Accomplishment score segments
by farm characteristics, farmer proﬁle and extent of diversiﬁcation ......... 156

Linear regression of the level of the importance/accomplishment score

(dependent variable) on the number of enterprises developed at the farm
(independent variable). .............................................................................. 157

xi

TABLE 5.19

TABLE 5.20

TABLE 5.21

TABLE 5.22

TABLE 5.23

TABLE 5.24

TABLE 5.25

TABLE 5.26

TABLE 5.27

TABLE 5.28

TABLE 5.29

TABLE 5.30

Chi-square between the extent of diversiﬁcation and Importance-
Accomplishment score segments. ............................................................... 158

The percentage of farm/ranch revenues derived ﬁom diversiﬁcation
enterprises and the relative importance of these revenues to the continued

operation of the farm/ranch ........................................................................ 159
The percentage of diversiﬁed farmers reporting positive net revenues from
their diversiﬁed enterprises ........................................................................ 160
Contribution of adaptive re-use of heritage resources to farm/ranch
revenues. .................................................................................................... 161
Effects of diversiﬁcation on the farm/ranch net income ............................ 162
Differences in the diversiﬁed farms and farmers among different effects of

diversiﬁcation on farm/ranch net income. ................................................. 163
Effects of diversiﬁcation on the farm/ranch debt. ..................................... 164
Differences in the diversiﬁed farms and farmers among different effects of

diversiﬁcation on farm/ranch debt. ............................................................ 164
Impact of diversiﬁcation on the farm/ranch employment. ........................ 166

Objective effect of diversiﬁcation on income enhancement among different
levels of perceived outcome. ..................................................................... 167

Objective effect of diversiﬁcation on debt reduction among different
levels of perceived outcome. ..................................................................... 168

Average ntunber of jobs created for family among different levels of

perceived outcome of diversiﬁcation to create position for family
members. .................................................................................................... 169

xii

FIGURE 1.1
FIGURE 1.2

FIGURE 1.3

FIGURE 1 .4

FIGURE 1.5

FIGURE 1.6

FIGURE 1 .7

FIGURE 1.8

FIGURE 1.9

FIGURE 1.10

FIGURE 1.1 1

FIGURE 1.12

FIGURE 2.1
FIGURE 2.2
FIGURE 3.1
FIGURE 3.2
FIGURE 5.1
FIGURE 5.2

FIGURE 6.1

LIST OF FIGURES

The Technological Treadmill .................................................... 2
Reduction of the Number of Farms in the US. (1975 — 2003) ............. 3

Increase of Prices Paid Index and Decrease of Prices Received Index
in the US. from 1975 to 2004 ............ . ........................................ 4

Summary of the Enterprise Paths that Farmers can Adopt to Face the
Current Agriculture Context .................................................... 6

Trends of Number of Farms and Ranches in US. and Texas
(1975-2004) ..................................................................... 11

Trends of Average Farm Size in US. and Texas from 1993 to 2003 . 11

Change in the Farm/Ranch Acreage by Farm Size in Texas Since
1970 ................................................................................ 12

A Proposed Model of Farm and Ranch Diversiﬁcation .................... 15
A Three-dimensional Approach of Farm and Ranch Diversiﬁcation 20

Continuum of the Scale of Agtourism Related Diversiﬁcation in

Terms of Levels of Developments/Investments .............................. 22
Diversiﬁed Activities within Recreation, Tourism and Hospitality ...... 23
The Future Evolution of Farm and Ranch Diversiﬁcation? ............... 24
Categories and Sub-categories within Farm Diversiﬁcation .............. 45
Goal-Directed Behavior Model ............................................... 57
Flow Chart of the Agriculture Diversiﬁcation Survey ..................... 77
Timing and Effect of Electronic Reminders for Wave A .................. 85
Scree Plot ........................................................................ 129
Levels of Goals Importance and Accomplishment ......................... 148
Objectives and Research Questions of the Study ........................... 172

xiii

CHAPTER I

INTRODUCTION

1.1 The Current Agricultural Context

Agriculture around the world has undergone and continues to confront major
restructuring. Technological developments}, changing governments support policies
(e. g., subsidies on selected crops), increasing and more diverse competition, and
changing markets are encouraging farmers to intensify and Specialize their agriculture
production. According to Cochrane’s theory of the treadmill of technology, early
adopters of new agicultural technologies enhance their proﬁts because of the reduction
of their production costs. Lower production costs encourage more farmers to adopt said
technologies, increasing the supply of a given commodity. However, the increased
supply frequently causes a decrease in commodity market prices and a resultant reduction

in farm and ranch net sales (Buttel et al., 1990).

Usually, late adopters do not beneﬁt from the initial technological rents and are
compelled to intensify and/or specialize their production or to enlarge their farm Size to
maintain or increase their revenues. In turn, agriculture intensiﬁcation and Specialization
as well as farm enlargement require more technology, leading to overproduction, greater
falls in commodities prices, and therefore the need for even more enhanced technologies.

Aﬁer each cycle the speed of the treadmill increases requiring larger investments for

 

' Technologies facilitating the agriculture intensiﬁcation and specialization were mechanization,
improvement of crop varieties, and development of agrochemicals (for fertilization and weed/pest
control), antibiotics and growth stimulants for agricultural animals (Altieri, 2000).

enhanced technologies, triggering the steady increase of the farm size and the decrease of

diversity (Figure 1.1).

 

   
 

   
   
 

Reduced
Prod uction
Costs

  
  

. Less farmers/

Increased
Proﬁts
ranchers
o PFICC'SqueeZe

- Loss of diversrty lgcrease of
'3 te

Technolo 0 lncrcased ggrega
gy enwronmental PFOdUCtIOD

damages
( -)
Decreased
Pnces

Figure 1.1 The Technological Treadmill

   
    

  
 
 

  
 
 

     
   

 

  

Need to
Increase
Yields

 

 

 

The effects of the technology treadmill on US. agriculture are evident in the
steady reduction of the number of farms, the increased average farm size, and the
decreased ratio prices of farmers [received/paid] over the last decades. According to the
United States Department of Agriculture (USDA: National Agricultural Statistics
Service, 2004a), the number of farms have decreased from over 2.5 million in 1975 to
barely above two million in 2002 (Figure 1.2). Conversely, the average farm size
increased from about 428 acres to 441 in the period 1979 — 2003, reaching its higher

point during 1991 and 1992 with a mean of 464 acres per farm.

 

Number of Farms In 0.5.
1975 - 2004

 

 

1975 1980 1985 1990 1995 2000
Year

 

 

 

Figure 1.2. Reduction of the Number of Farms in the US. (1975 — 2003)
Source: USDA-NASS. Quick Stats - US. and State Level Data. 2004

In addition, farmers have experienced a reduction in the prices received index
compared to the prices paid index during the last years. The prices received index is the
measure of prices that ranchers and growers receive for their products while the prices
paid index is the measure of the costs of the inputs necessary to produce/ grow
commercial commodities, such as fuel and fertilizers (USDA: National Agricultural
Statistics Service, undated). The National Agriculture Statistics Service (USDA: National
Agricultural Statistics Service, 2004b) reports that the agricultural prices received index
have only increased from 73 in 1975 to 120 in 2004 (less than a two-fold increase), while
the prices paid index have increased from 47 to 133 (almost a three-fold increase). That
is a decrease in the prices received/paid ratio from 1.55 in 1975 to 0.9 in 2004, meaning a
signiﬁcant reduction in the farm and ranch revenues. Figure 1.3 shows the prices paid

index compared to the prices received index in the US. from 1975 to 2004.

 

AI Farm Index: Prices Received and Price Paid
1975 - 2004

140

120

 

100
00
‘0 -t-Plkl --4iuunved
40
1975 1900 1905 1990 1995 2000 2005

Year

 

 

 

Figure 1.3. Increase of Prices Paid Index and Decrease of Prices
Received Index in the US. from 1975 to 2004.
Source: USDA: National Agricultural Statistics Service,
Agricultural Charts and Maps, 2004

These trends present a challenging context to farmers and ranchers. The constant
pressure to promptly adopt enhanced technologies and the steady agriculture cost-price
squeeze are setting conditions that not only favor large corporate agricultural ﬁrms but
are also facilitating their enlargement, hence the expansion of their market control.
Specialized and intensive (i.e., industrial) agriculture have brought some immediate
beneﬁts to society, such as safe and less expensive food. However, industrial agriculture
is visiting a heavy burden in the form of negative extemalities to our society. For
example, 1) the reduced number of farms and ranches promotes rural exodus —especially
young people— to larger cities seeking better jobs, what in turn implies other problems
such as the under-utilization of rural investments (e. g., schools), change of [rural]
lifestyles, and over-population of closer urban areas; 2) the increased use of machinery
in agriculture has decreased the need for farm labor; 3) specializad trends are causing the
loss of diversity (e.g., native crop selections) and disruption of the rural landscapes; and

4) the intensive use of chemicals (e. g., fertilizers, pest control products) has increased

environmental damages such as water poisoning, contamination of soil and depletion of

underground water resources.

Farms and ranches -especia11y family owned- are facing the current intensiﬁcation
and specialization trends by adopting various coping strategies to maintain or increase
their proﬁts in order to remain farming. The success of these strategies are crucial to the
society, especially to local communities, because they can help to alleviate the economic,
social and environmental effects that intensive agriculture has brought and continues to
bring to our society. Moreover, many contend that keeping farms in business and farmers
on farms is important to the American cultural identity because “farming and ranching
lifestyle is still believed to be an important and Virtuous endeavor, worthy of [our]

continued support” (USDA: National Agricultural Statistics Service, undated).

Restructuring Strategies to Face the Current Agricultural Context

Literature indicates that farmers are adopting numerous restructuring strategies2 to
cope with the challenging agricultural context. Although farmers can maintain their
traditional farm production model, or [partially or totally] retire from farming (McGehee
and Kim, 2004; Wilson et al., 2001; Damianos and Skuras, 1996; Bowler et al., 1996),
most strategies focus on making structural farm adjustments and ﬁnding new paths of
enterprise development (Barlas et al., 2001; Mahoney and Barbieri, 2005). Figure 1.4
summarizes Six different strategies that farmers are adopting to face the current

agriculture context.

 

2 Evans and Ilbery (1992) deﬁne a restructuring strategy as the “way in which farm businesses evaluate
past decisions concerning the deployment of capital resources, attempting to ensure that ﬁrture capital-
related decision-making is effective” (p. 85).

 

 

 

 

 

 

Figure 1.4. Summary of the Enterprise Paths that Farmers
can Adopt to Face the Current Agriculture Context

Source: Adapted from Bowler et al. (1996)

The ﬁrst strategy is adoption of the industrial model that aims to reduce per unit
production costs. Intensiﬁcation and/or specialization of the farm production along with
the farm size enlargement and entering into the technological treadmill enable the
production costs savings. However, sustaining the required pace of industrial agriculture
is not an option for every farmer. For example, the need to purchase new technologies
requires having a strong capital that in absence may lead to the increase of the farm
indebtedness (Ilbery, 1991). Besides, evidence suggests that industrial agriculture creates
negative extemalities, such as “soil erosion, poisoned ground waters, food-bome
illnesses, loss of biodiversity, inequitable social consequences, toxic chemicals in foods

and ﬁber, loss of beauty. . .” (Tompkins, 2002).

Farmers have also engaged in horizontal expansion of their farm into other

geographic areas. Horizontal integration aims to increase the control and ownership of a

certain market within the same stage of the food system, such as production, distribution
or processing) (Heffeman, 2000). However, this strategy requires access to great
amounts of capital to build new facilities or acquire neighboring farms, which is not
feasible for many farmers and ranchers. Moreover, horizontal expansion within certain
commodities is no longer feasible because a very few corporate ﬁrms already control
many agricultural markets. For example, four companies (ConAgra, Superior Packing,
High Country and Denver Lamb) control 73% of sheep Slaughter in the US. (Heffeman,

2000).

Farmers can also enter into production contracts with an integrating ﬁrm, by
which the integrating ﬁrm outsources the agricultural raw product and other agricultural
supplies while the growers provide the land, labor, buildings and equipment according to
the integrating ﬁrm’s Speciﬁcations. The original foundation of a production contractng
is a win-win situation for both parties based on the enlargement of the market share of the
commodity produced. However, examples Show that production contracting can evolve
into market monopolies where the integrated ﬁrm becomes completely powerless
(Heffeman, 2000). For example, the Tyson Corporation poultry-integration production
that started in the 70’s has showed a very proﬁtable venture for the corporation whilst a
steady disadvantage for the integrated farms. From 1980 to 1990, Tyson’s proﬁts
increased 14 fold while the price that integrated farms received remained the same

(Springdale, 1992). The ﬁnancial Situation of the farms got very complicated due to the

 

50% increase of the production costs along with the payments of the mortgages incurred

to build the conﬁnement barns (Ibidem)3.

The development of strategic partnerships and economic linkages is another
strategy that some farmers are adopting. Synergies and networks built at different levels,
such as economic synergies amongst activities within the same farm and networks
amongst farms, can not only increase the farm proﬁtability but also enable rural
development (Knickel and Renting, 2000). Production or processing cooperatives4 and
community support agriculture (CSA)5 are examples of the advantages of partnerships
within the same level (i.e., farmer-farmer) and at different levels (i.e., farmer-consumer)
respectively. Agriculture cooperatives can result in a two-fold beneﬁt: the members can
optimize proﬁts (e.g., because of the aggregate production, cost reduction or better
bargaining power) and they keep the proﬁts obtained through the cooperative instead of
leaking to an external investor. In community support agriculture, farmers beneﬁt
because they increase their proﬁts through the direct sales while members beneﬁt from
fresh products and the intrinsic “satisfaction gained from reconnecting to the land and

participating directly in food production” (USDA: Agricultural Research Service, 1993).

 

Springdale (1992) also states that when growers considered collective bargaining to enhance their prices-
received, Tyson threatened to cancel contracts of any growers involved in such bargaining measures.

Cooperatives are businesses that are owned and controlled by the people who use them (i.e., members) in
beneﬁt of their members (USDA: Rural Business - Cooperative Services, 1995). According to the US.
Department of Agriculture, in 1995 there were reported 4,006 farmer cooperatives in operation: 2,074
primarily marketed farm products; 1,458 handled primarily farm production supplies; and 474 provided
services related to marketing or purchasing activities (USDA: Rural Business - Cooperative Services,
1997)

CSAS are partnerships between farm and local people (i.e., share-holders). The shareholders pay in
advance to cover the anticipated costs of the farm Operation and farmer's salary receiving in return
products that the farm grows throughout the growing season. Both parties share the risks of farming,
including poor harvests due to unfavorable weather or pests (USDA: Agricultural Research Service,
1993). The Thomas Jefferson Agricultural Institute (undated) reports that there are 1200 CSAS in the
US.

Redeployrnent of farm labor resources into off farm employment (i.e., other
gainful activities) is another structural change strategy that farmers frequently adopt
(Benjamin, 1994). Farmng is often viewed as a less lucrative employment option
compared to off-farm and as a result many farmers are switching to non-farm occupations
for their primary source of income, and more children of farm families are Opting for
careers off the farm (USDA: National Agricultural Statistics Service, undated). Off-farrn
employment in the US. iS relevant because of the number of farm and ranch operators
that work off the farm and because of the impact of off-farm income to farm households.
While one-third of American farm operators worked (mainly full-time) off-farm since the
seventies, since 1999 only 10% percent of farm household income comes from the farm
operation (USDA: Economic Research Service, 2002). The downside of this farm
adjustment strategy is that it reduces the time that operators can put in the farm business
(ibidem).

F arm/ranch diversiﬁcation is another option for farmers, especially small farms
and ranches, to confront the current agriculture challenges (Barlas et al., 2001; Ilbery,
1991). Although there is not a standard deﬁnition for agriculture diversiﬁcation
(Daskalopoulou and Petrou, 2002), a commonly accepted meaning is the reallocation and
recombination of farm resources (i.e., land, labor or capital) into new unconventional
crops/animals or into non-agricultural enterprises developed on the farm/ranch (Ilbery,
1991). Farm and ranch diversiﬁcation responds to the growing recognition among
farmers and ranchers that their survival depends on them becoming entrepreneurial
business managers, and not just more efﬁcient agricultural producers (Mahoney et al.,

2004).

Overview of Texas Agriculture Context

Texas is the largest of the contiguous continental states and the second largest
overall following Alaska. The last US. Census (2000) estimated the population of
Texas was over 22,000,000, making it the second most populated state next to California.
It is estimated that the population of Texas increased another 6.1% from 2000 to 2003

(US. Census Bureau, 2004).

Agriculture represented about ﬁve percent (4.83%) of all Texas production of
goods in 2004, corresponding to $10.10 billion (Texas Comptroller of Public Accounts,
2004). The net farm income of Texas agriculture was estimated to be $5,939 million in
2003 (USDA: Economic Research Service, 2004a)6. In 2001, about ﬁfteen percent
(14.7%) or 1,805,650 persons of Texas were employed in farm and farm-related
enterprises and organizations. In 2004, the percent of farm and farm-related
employment in Texas was very close to the US. Average «14.6% (USDA: Economic

Research Service, 2004b).

The four principal agricultural commodities in Texas in order of market receipts
are cattle, cotton, greenhouses (including nursery) and broilers. Texas leads the nation in
cattle and calves production, with almost seventeen percent (16.8%) of the American

production representing a value of$6,124 million7 (U .S. Census Bureau, 2001 ).

The number of farms and the average farm size in Texas differ from national
trends. The number of farms and ranches in Texas has steadily increased over the last

years. The National Agricultural Statistics Service (USDA: National Agricultural

 

6 According to previous statistics (1999), Texas has the second farm net income in the US. after California
(U .8. Census Bureau, 2001). More recent data was not available.

7 Information corresponding to 1999.

10

Statistics Service, 2004b), reports an increase from 189,000 “farms” in 1975 to 229,000
in 2003. The average farm size (in acres) on the other hand, has decreased from more
than six hundred (610) in 1993 to 570 in 2003. This splintering of farms and ranches is
changing the nature of Texas agriculture. Figures 1.5 and 1.6 show trends in Texas

compared to those nationwide.

 

Number of Farms in u.s. and Texas
1975 - 2004

 

1975 1980 1985 1990 1995 2000 2005
Year

 

 

 

Figure 1.5. Trends of number of farms and ranches in US. and Texas (1975 — 2004)
Source: USDA-NASS, US. and State Level Data, 2004

 

Average Farm Size (acres) In u.s. and Texas
1993 - 2003

c : a .ﬁ _. 4
‘. >' .‘ ’ i '1‘
.~,‘ :;‘ J ..
.. :4 -: . , _ q
- w. . -« g g! 1
a: . H ﬂ ~- 7
, n i' i ;g u’ 5

V trlrnrlrrrrlslrrltrlttl

1997 1999 2001 1003
Year

I “Texas -u.s. l
—Trendllne (0.5.) —‘I’rendline (Texas)

 

        

 

 

 

 

 

Figure 1.6. Trends of average farm size in US. and Texas from 1993 to 2003.
Source: USDA: National Agricultural Statistics Service, US. and State Level Data, 2004

 

 

 

The increase in the number of farms and ranches and decrease in farm size is not
contributing positively to the agricultural context in Texass. A more detailed
examination of the farm acreage distribution trend in Texas9 reveals that the number of
acres in medium-Sized farms is dramatically shrinking, about 250,000 acres per year as
Shown in ﬁgure 1.5 (Texas A&M University System and American Farmland Trust,
2003). In brief, although an average of 1,000 new farms/ranches have been established
annually in Texas Since 1970, the total land used for agriculture has declined by almost 3
million acres (American Farmland Trust, undated). Many of the persons who own these
farms and ranches are not as dependent on agricultural income for their ﬁnancial well-

being, and therefore are not required to maintain them in agriculture production.

 

 

(thousands)

 

Acres lost or gained 1992-1997

«no r-zoo 2-soo s-rooo r-zooo >zooo
Farm Size in Acres

Figure 1.7. Change in the farm/ranch acreage by farm Size in Texas since 1970.
Source: American Farmland Trust, undated

 

8 The uncertain context of the Texan agriculture is also evident when other economic indicators are
examined. For example, the agriculture share of Gross Texas Product has steadily decreased ﬁorn 1.7%
in 1991 to 1.2% in 2004, and it is forecasted to decrease below one percent (0.9%) by 2010 and to half
percent by 2020 (Texas Comptroller of Public Accounts, 2004).

Most of Texas farm and ranches (78%) are smaller than 500 acres, 16% are medium-sized (500 - 2,000
acres) while only 6% have over 2,000 acres. However, those farm size classes represent 14%, 23%, and
63% of the total Texas farm acreage respectively (Texas A&M University System and American
Farmland Trust, 2003).

O

The reduction in the number of medium-sized farms and ranches in Texas is
occurring mostly because those farms are being consolidated into corporate ﬁrms or
because of land fragmentation. Land fragmentation is the division of farms and ranches
into smaller units in order to accommodate new landowners. This oﬁen takes place when
an owner dies and his/her children jointly inherit the land. The problem with land
ﬁagmentation in Texas is that new landowners do not devote their lands to agricultural
purposes either because the land is too small for traditional farming or because their
interests lean toward “reconnecting with the spirit of the Old West”, raising a few cattle,

hunting or exploring the countryside for example (American Farmland Trust, undated).

Land fragmentation and splintering of farms and ranches in Texas is producing
some signiﬁcant agricultural and societal impacts. There are concerns that this increasing
land ﬁagmentation is consuming open Space, degrading wildlife habitat, and depleting
and polluting water resources (American Farmland Trust, Undated). Furthermore, rural
communities are experiencing declining populations, above-average poverty, above
average unemployment rates and insufﬁcient economic opportunities to retain their youth

(Wood, 2004).

Farms and ranches across Texas are diversifying their operations as a means of
conﬁonting current agriculture challenges (Wood, 2004). Case studies of diversiﬁed
farms and ranches in Texas developed as part of a project with the Grazing Land
Technology Institute revealed that they are growing specialty crops (e.g., herbs) and non-
conventional livestock (e.g., bison), offering educational programs (e.g., workshops and
seminars), developing new marketing strategies (e.g., on-farm stores and virtual markets),

and providing Special services, among others (Mahoney and Barbieri, unpublished). For

13

example, Knolle Farm & Ranch Bed, Barn & Breakfast (Sandia) has a Bed and Breakfast
and offers several recreational activities, 7A Ranch (Hondo) processes beef cuts
according to the clients speciﬁcations, Messina Hof Winery (Bryan) has turned a 19‘h
Century convent into a guest center for wine tasting and other events (e.g., weddings);
and Hill Country Lavender (Blanco) uses e—commerce and have an on-farm store to offer

its herbs and value-added products (e. g., soaps, candles and health products).

Agriculture diversiﬁcation through various types of recreational activities (e.g.,
hayrides, ranch tours, hunting); accommodation services (e.g., bed and breakfasts, cabins
and cottages rentals); and a combination of both (e.g., cattle drives, farm and ranch
vacations) are also popular in Texas (Mahoney and Barbieri, 2004). For example,
Richards Ranch (J acksboro) provides a wide range of recreational activities in the
15,000-acre working cattle ranch, such as guided tours, horseshoes, volleyball, croquet,
stargazing, paddle boating, hiking, picnics, hayrides, ﬁshing, and paid hunting. In

addition, the ranch has cabins and a lodge, organizes special events and offers catering.

1.2 Agriculture Diversification — A Proposed Model

Agriculture diversiﬁcation includes any enterprise or entrepreneurial venture that
is incorporated into a working farm or ranch primarily for the purpose of generating
additional income and adding to value(s) and return(s) from working farms and ranches
(Mahoney et al., 2004). There are a broad range of enterprises and direct marketing
strategies that farmers and ranchers are incorporating on their farms and ranches,
including growing of specialty herbs, recreational activities, wine-making, virtual

markets, conversion of historic barns into yarn shops, among others. The types of

14

diversiﬁcation enterprises that farmers and ranchers are launching can be classiﬁed in
several ways. Figure 1.8 shows one model for depicting and classifying the various types
of ranch and farm diversiﬁcation enterprises. This model was developed based on a

review of more than 1,500 diversiﬁed farms and ranches throughout the US.

 

 
  

  
  
 

Value
Added
to Existing

  
    
 

   

Practices

 

Expertise
Consulting 81
Education

  
 
 

  

 

 

Farm & Ranch
DiversifiCatlon'
Model

   
  
  
 
   
    
  

 
 
  

  
 

Contracts
8: Services

 
 
     
   

Hospitality

     
   
 
 

 

Leases,
Easements
Dr Time
Shares

Historic .
Preservation

81 Adaptive
Re-use

   

 

 

 

Figure 1.8. A Proposed Model of Farm and Ranch Diversiﬁcation
Source: Mahoney et al. (2003)

The ﬁrst diversiﬁcation category involves the introduction of non-traditional
crops, livestock and/or farming/ranching stewardship practices into their operations, such
things as bison, wild boar, shrimp, hemp, herbs and mushrooms. These crops and
livestock are not conventional or customary on that farm or ranch or in the geographic
area. Often farmers and ranchers combine non-traditional crops or animals with new
farming practices to produce an entire new product line to meet an emerging demand and
in a “values-added” way. The non-traditional farming practices also allow the farmers

and ranchers to appeal to new markets concerned about food health and the environment.

This sometimes allows the farmer or rancher to Simultaneously reduce their production
volume, costs and negative extemalities (e.g., soil erosion) while generating additional
net revenues such as organic agriculture or the use of no-additives. An example would be
the Moseley Ranch of Texas Bison Company (Caddo Mills, Texas) that raises grass-fed
Bison using a combination of sustainable farming methods such as grass management,

bee-pollination, restoration of native prairie grasses and no pesticides.

Diversiﬁcation can also be accomplished through the introduction of new
marketing and merchandising activities, and communication and promotional media that
make ranch and farm products and services more readily accessible, such as direct mail
promotions, catalogs, on—farm and off-farm retailing, Special Internet promotions and
virtual markets. Farmers and ranchers are expanding the Size of their markets through
new combinations of marketing. For example, Fredericksburg Herb Farm
(Fredericksburg, Texas) offers an on-line catalog of the herbs and processed products to
reach a broad market through e-commerce. In addition, the company has an on-farm

store in which to sell its herbal products.

Integrating recreation, tourism and hospitality enterprises is another common type
of farm and ranch diversiﬁcation. The growth in these enterprises on farms and ranches is
in response to the growth in the Size and “willingness to pay” of markets who are
environmentally sensitive, interested in farm and ranch heritage, attracted to hands-on
learning experiences, and seeking soft-adventure experiences (e.g., mountain biking on a
ranch). This new line of diversiﬁcation enterprises is also being encouraged by the
reduction of lands available for various forms of recreation (e.g., hunting, ﬁshing) and the

proximity of farms and ranches to population centers — urban sprawl is bringing markets

16

closer. Diversiﬁed activities within this category comprise the direct purchase of
agriculture products on-Site (e.g., on-farm market), the recreational self-harvest of the
farm products (e.g., fruits, ﬂowers, Christmas trees), the participation in recreation
activities (e.g., tours, ﬁshing and hunting) and events (e.g. festivals), on-farm dining,
farm/ranch vacations and accommodations (e.g., B&B and cottages). For example, the
ﬁve-generation X-Bar Ranch (El Dorado, Texas) has established a rural nature based
tourism program that includes nature tours and mountain bike rides and working ranch

activities, offers specialty dining, lodging and camping areas.

Historic Preservation and Adaptive Re—Use refers to the restoration and adaptive
(revenue generating) re-use of old buildings, structures and farm equipment that farmers
have restored such as for old barns converted into theaters, centennial cottages
transformed into gift Shops and old tractors used for hayrides. These adaptive re-uses
include recreations and tourism, merchandising space, and education. For example,
Luckenbach Farms and Guest House (F redericksburg, Texas) features an 1850’s cabin
where German settlers to the area ﬁrst stayed. The cabin has been restored and converted
into a four-bedroom guesthouse with modern conveniences (e. g., air conditioning,
modern plumbing and furnished kitchen) and decorated with furnishings representing the

settler's time.

Another type of farm diversiﬁcation category includes revenues produced from
leases, rentals, easements and time-Shares of the farm and the farm resources (e.g., land,
buildings, animals and equipment). There are more and more opportunities for farmers
and ranchers to rent buildings and Spaces for Special events and recreation. The most

common leases are associated with outdoor recreation, such as hunting leases and

17

easements and the rentals for especial events. For example, San Martiﬁo Winery and
Vineyards (Rockwall, Texas) rents the winery at hourly basis to host Special events such
as private parties and weddings. Continental Ranch (Mason, Texas) is a 47,000 acres

working ranch that offers hunting leases of thirteen different exotic Species.

Contracting and services offered to others, either farmers or non-farmers, is
another type of revenues diversiﬁcation. This category includes numerous activities such
as boarding and training horses, contract growing of rare and endangered Species, plants
for restoration jobs and native plant community restoration and management planning.
For example, two centennial ranches in Texas, King Ranch (Kingsville) and Margo
Ranch (Rio Grande) offer lots for cattle feedng and veterinary services respectively. It is
pertinent to state that not all the diversiﬁcation enterprises in this category are necessarily
associated with farming and ranching and often are “Spin-offs” of other diversiﬁed
enterprises. As a casein point, Nueces Canyon Ranch (Brenham, Texas) offers catering

services.

Farms and ranches are also offering their expertise to others through educational
programs and consulting services. There is a growing number of classes, workshops and
internships including a broad spectrum of topics such as cooking, ranching, wine making,
ﬂowers and herbs growing, perrnaculture, and organic farming being offered. For
example, Pure Luck Texas, an organic and diverse farm located in Dripping Spring
(Texas) offers cheese-making workshops. Buena Vida Winery features classes on “ﬂavor
dynamics and the interactions between food and wine” focusing on the balance between

fats, herbs and acids with the proper wine.

l8

Value(s)-added to existing agricultural products is one of the most common forms
of diversiﬁcation because it generates additional revenues, reduces direct price
competition, and extends the Shelf life of the harvest. Value(s) added is not limited to
additional processing, nor is it limited to increasing the value to the farmer or rancher.
Effective value(s) added can increase the values to consumers and to society as well as
merchants. This category includes: 1) the processing of the agriculture product, such as
yarns, wines, butchering, leathers, gourmet cheeses dried ﬂowers and 2) the packaging of
the agriculture product, such as gift boxes and personalized labels for Special occasions.
For example, Hidden Springs Winery (Pilot Point, Texas) adds value to their grapes,
processing table and dessert wines. On top of the wine, the farm adds value offering
private labels using the photo, message or logo provided by the customers and gift
baskets created with their own wines and a broad variety of other local products (e.g.,

cheese, sausages).

Some Observed Attributes of Agriculture Diversiﬁcation

Identiﬁcation and study of some diversiﬁed farms and ranches throughout Texas,
the US. and Canada (Mahoney and Barbieri, 2005) reveal four characteristics and
attributes of farms and ranches that have diversiﬁed their operations. First, farmers and
ranchers are diversifying along three different but related dimensions as modeled in

ﬁgure 1.9.

19

 

Consumer
I

L

E

8 u

E g . . .

g t, DiverSIfied
3;: : Farms &
'5 2 Ranches
9 m

f >

(D

>

  

New Enterprises
Traditional A New

Agriculture Horizontal Integration 7 Agriculture

 

Farmer/
Rancher

 

 

 

Figure 1.9. A Three-dimensional Approach of Farm and Ranch Diversiﬁcation
Source: Mahoney et al. (2004)

Farmers and ranchers horizontally diversify by integrating new enterprises such as
non-traditional crops and animals, recreation activities, on-ranch and on-farm markets
and specialty foods into working ranches and farms. They vertically diversify through
strategies intended to add values to their products and services through processing,
specialized packaging and practicing special agricultural methods (e.g., organic
production, sustainable farming) and getting closer to their customers. In addition, farm
and ranch enterprises can diversify by combining new-targeted marketing and
distribution methods to increase awareness of their products and services and to broaden
their markets to more distant locations. Examples of the said marketing and distribution
methods include direct marketing to target customers (e.g., newsletters, customers clubs)
that increase purchase and build customer loyalty, virtual markets that allow potential
customers to compare, select and pay for a range of products, and cooperative marketing

that can increase product awareness with lesser efforts and costs.

20

The three-dimensional diversiﬁcation is important because the several
products/services offered at the farm can be cross-marketed and serve as more holistic
value-added propositions. For example offering ranch or farm tours can not only
generate revenues, but also help create a continuing “demand” for Specialty products of
the farm (e.g., jellies). This is consistent with the observation that the most successful
operations appear to diversify along all three dimensions. For example, 7A Ranch has
integrated many different types of diversiﬁed enterprises into its organic ranching. They
offer tours of the ranch, host group events and cater their own barbeques that in turn
increase the sale of its customized cuts of meats and its own sausage in their on-ranch
market. In addition, 7A Ranch combines traditional marketing methods with Internet

appearance and direct (overnight) Ship their products anywhere in the country.

A second characteristic is that diversiﬁed farms and ranches can be classiﬁed
along a continuum of the scale of diversiﬁcation and in terms of the number and types of
diversiﬁcation enterprises and measured in terms of the level of investments/
developments. For example, Alpacas of Green Acres (Rockwall, Texas) is a diversiﬁed
farm that grows Peruvian alpacas for sale. Conversely, Americana Alpacas (N avasota,
Texas) not only sells the animals they raise, but sells other types of products (e.g.,
clothing) that are either produced at the farm or by others through several distribution
channels (e.g., virtual market). In addition, Americana Alpacas produce yarn, offer
several services (e.g., boarding services, retailing from other producers, and webpage
development for other alpaca breeders), provides educational seminars regarding Alpaca
matters, and organize and participate in events and rent Alpacas for events. That is,

Americana Alpacas has developed a total of seven types of enterprises. Figure 1.10

21

shows a continuum of the scale of diversiﬁcation in terms of levels of investments in
agtourism-related diversiﬁcation, including investments in facilities, services and

employees needed to provide and support on—farm/ranch recreational activities.

 

     

Farm/Ranch

Wildlife Observation

 

Horse Riding Thematic Summer Camps an”. :1 HI: “I
Festivals
Hunting Leases
Educationa' . - Clmpﬂl‘oundi "on FII’III/RII‘C'I
“.90“ train/Hayride: Tours Private Parties W m
Cottage]
' Farm Ranch
Farm/Ranch Tours Petting Zoo Weddings Cabins Vac: l
PIck-cut-gather Cookouts a Sit-down
your own Corn Maze Barbecues Dining B”
Low Developments] Investments High Developments/ Investments

 

 

 

Figure 1.10. Continuum of the Scale of Agtourism Related Diversiﬁcation
in Terms of Levels of Developments/Investments

Source: Mahoney and Barbieri (2003)

A third feature is that farms and ranches are deliberately developing product-lines
of diversiﬁed enterprises that are related to and support each other (e.g., cross marketing,
different values-added) and appeal to different market segments. For example many
farms and ranches offer a range of farm and ranch recreation that are symbiotic. Often,
these enterprises come from suggestions from customers and because together the
different enterprises help create the farm or ranch as a destination attraction worthy of a
trip, return trip or longer trip to the countryside. For example, Recreation, Tourism and
Hospitality category includes u-pick-up activities (e.g., berries harvest), recreational

activities such as snowmobiling races and hayrides, wildlife observation, and various

22

types of on-farm accommodations such as Bed and Breakfast, rental of cottages and
cabins and ranch vacations. Figure 1.11 Shows the several types of diversiﬁed activities

that farms and ranches are offering in the Recreation, Tourism and Hospitality sectors.

 

   

  
   
 
    
  

Farm & Ranch
Diversiﬁcation

Recreation,
Tourism &
Hospitality

      
  
   
  

Regional
Cuisin-

Education

     

Recreation

     
   
 

Wildlife Interpret.
at

Fisheries

 

 

 

Figure 1.11. Diversiﬁed Activities within Recreation, Tourism and Hospitality
Source: Mahoney and Barbieri (2003)

Finally, to be successﬁrlly understood and implemented, agriculture
diversiﬁcation must be viewed as a dynamic strategy, that is, subject to change over time.
Hence, the diversiﬁcation model presented is not intended to reﬂect a static or mature
phenomenon. Instead, the model recognizes that new diversiﬁcation category(ics) can be
included or even excluded over time according to the contextual changes. For example,
some diversiﬁed farmers have reported lately the development of manufacturing on their
farms while it is already evident that the agricultural bio-technology (e. g., genetic

engineering) developed on the farm will steadily increase over time (see ﬁgure 1.12).

23

 

Value
Added

If~ ‘
Fafrh & Ranch
Diversification:
The Future Model?

Farm & Ranch

Diversiﬁcation
Model

 

 

 

 

Figure 1.12. The Future Evolution of Farm and Ranch Diversiﬁcation?

1.3 Problem Statement

A variety of evidence, mostly anecdotal, indicates that more farms and ranches
throughout the US. '0 are developing different enterprises and diversifying existing
enterprises as a means of achieving ﬁnancial and non-ﬁnancial objectives. For example,
as part of this study Mahoney (2005) identiﬁed and analyzed over ﬁfteen hundred
diversiﬁed farms and ranches throughout the country that market their products and
services on the World Wide Web1 1. Clearly, there are many more diversiﬁed farms and
ranches that could not be identiﬁed through this search method.

However, even though more diversiﬁcation is occurring in North America and

around the world, little is scientiﬁcally known or documented regarding the extent and

 

'0 McNally (2001) report that between 28% and 40% of the farms in England and Wales undertake some
form of non-farming activity according to previous studies.

” Speciﬁcally regarding tourism diversiﬁcation, Nickerson et al. (2001) identiﬁed over seven hundred
farmers offering tourism activities in Montana to assess the reasons behind their diversiﬁcation, while
McGehee and Kim (2004) used a sample frame close to one thousand farms to conduct a similar study in
Virginia.

24

characteristics of farm diversiﬁcation in the US. First, the types and combinations of
enterprises farmers are developing on their farms is not known. Most of the existing
scientiﬁc studies identifying the types of diversiﬁed farm and ranch enterprises have been
conducted outside the United States, pertaining mostly to Europe, Canada and Australia

(e.g., McNally, 2001; Ilbery, 1991).

Second, it is inconclusive why (i.e., motives, objectives) farmers and ranchers are
diversifying their farms and ranches and whether or not they are achieving desired
purposes. The few existing studies regarding the motivations behind farm diversiﬁcation
mostly deal with the inﬂuence of characteristics of the farm (e. g., location, size), the
farmer (e.g., age and education level) and the environmental context (e.g., policies) have
on the diversiﬁcation decision-making process (e. g., Daskalopoulou and Petrou, 2002;
Damianos and Skuras, 1996; and Anosike and Coughenour, 1990). Furthermore, the
studies dealing with diversiﬁcation motives have been conducted outside the American
boundaries (e.g., Bowler et al., 1996; and Getz and Carlsen, 2000) or were limited
primarily to tourism and hospitality related diversiﬁcation (McGehee and Kim, 2004;
Nickerson et al., 2001). Without knowing the motivations driving diversiﬁcation, it is
impossible to validly assess its success in accomplishing alternative objectives. Most of
the case studies intended to demonstrate success are anecdotal and it is difﬁcult to

determine their relevance/ generalization in other Situations.

Third, and most important, it is not yet determined whether and to what extent,
various types of diversiﬁcation are effective at accomplishing both economic and non-
economic objectives of farmers and ranchers. Often there is a complex of goals behind a

farmer or rancher’s decision to diversify including traditional economic objectives and

25

non-economic goals (e.g., McGehee and Kim, 2004; Nickerson et al., 2001; Getz and
Carlsen, 2000; Ilbery). The assessment of the effectiveness (results) of diversiﬁcation
strategies has mostly centered in its ﬁnancial and economic impacts on the farm or the
farm household (Anosike and Coughenour, 1990). Furthermore, the assessment of
economic beneﬁts of farm diversiﬁcation is not consistent; literature reports both
proﬁtable and little or unproﬁtable cases (McNally, 2001). The measures of “ﬁnancial

success” are also very diverse and measurement varies considerable.

Previous studies regarding agriculture diversiﬁcation reveal that farmers and
ranchers are diversifying their operations in pursuit of both economic as well as non-
economic purposes. They have also indicated some attributes of the farm (e.g., farm size,
farm tenure) or farmer (e.g., farmer life cycle, age) that are associated with
diversiﬁcation, although ﬁndings are not conclusive. In addition, studies have
demonstrated the economic value of diversiﬁcation as a tool to face the challenging
current context of agriculture either enabling the survival of the farm (e. g., Sharpley,
2002; Ventura and Milone, 2000; Fleischer and Pizarn, 1997), or proving to be a very

proﬁtable venture (e.g., Nilson, 2002).

The problem is that existing studies have failed to comprehensively assess the
extent to which diversiﬁcation is motivated by and accomplishing the non-economic
goals of farmers and ranchers. In part this is because the emphasis has been primarily on
agricultural tourism diversiﬁcation and the studies have generally been more qualitative
in nature. Furthermore, Getz and Carlsen (2000) state that the assessment of goals and
success of rural tourism and hospitality businesses on farms and ranches cannot be

generalized because of the secular characteristics of the tourism and hospitality industry.

26

Much of the literature that was reviewed in preparation for this study encourages
a more comprehensive understanding of agriculture diversiﬁcation and the values that it
brings to farmers. Ilbery (1991) states that a more theoretical and empirical analysis of
farmers’ attitudes and motives is required to understand the farmerS’ responses (e. g.,
diversiﬁcation) to agricultural change while Ilbery et al. (1998) urge to appraise the
motives of farm household in the decision making processes. Anosike and Coughenour
(1990) stress that agriculture diversiﬁcation being a dimension of the farm structure,
hence a component of the sociology of agriculture, it becomes necessary to learn about its
socioeconomic effects”. In addition, Kuratko et al., (1997) state that a lack of empirical
work on entrepreneurial motivation is evident, while Lynn and Reisch (1990) urge to
investigate the purposes or reasons behind [small business] diversiﬁcation, as well as the
level of satisfaction of the owners and managers with their diversiﬁcation in small
businesses. Furthermore, conclusions regarding the success of agriculture diversiﬁcation
are crucial taking into account that the goals achievement motivates entrepreneurs to

sustain their business efforts (Kuratko et al., 1997).

The study of farm diversiﬁcation in Texas is especially important because of the
relevance of Texan agriculture in the United States. Furthermore, because no scientiﬁc
studies regarding agriculture diversiﬁcation have been conducted in Texas and very few
in the United States (e. g., McGehee and Kim, 2004; Nickerson et al., 2001; and Anosike

and Coughenour, 1990).

 

'2 Although Anosike and Coughenour ( 1990) refer in their study only to the diversiﬁcation through the
introduction of unconventional crops/livestock, the statement can be extended also to structural
diversiﬁcation.

27

Therefore, this study advances the knowledge of the processes and motives
behind diversiﬁcation and the spectrum of economic and non-economic values that
farmers obtain from diversiﬁcation assessing the success of this strategy. It also
evaluates diversiﬁcation as a strategy to achieve various farm and ranch objectives. It
also provides a veriﬁcation of diversiﬁcation models and advances the theoretical basis

for future more Speciﬁc studies.

1.4 Objectives, Research Questions and Hypothesis

Diversiﬁcation is one strategy for coping with the economic and ﬁnancial
challenges that current agriculture context poses to farmers and ranchers. Evidence
suggests that agriculture diversiﬁcation may bring other than economic values to farmers.
This study assesses the satisfaction of the different goals that motivate farmers to develop
additional on-farm enterprises to comprehensively evaluate the success of agriculture

diversiﬁcation.

‘Success ’ in this study is constructed based on two essential foundations of the
decision-making process of farm adjustment strategies: the central actor role of farmers
and the mix of personal as well as economic goals for diversiﬁcation. This study deﬁnes
success as satisfaction with the extent to which diversiﬁcation has achieved various
objectives, both personal as well as extrinsic, that initially motivated farmers to diversify
their farms. To evaluate the success of agriculture diversiﬁcation, this study addresses
two key questions that have not been comprehensively addressed in previous studies.
First, what is the set of goals that motivate farmers to diversify? Second, in what extent

are those goals achieved according to the perceptions of the farmers and ranchers? This

28

study aims to develop a framework that describes and clariﬁes the degree of success of

agriculture diversiﬁcation according to given attributes of the farm and farmer.

The next section presents the study objectives, research questions and hypothesis
that are developed and tested to comprehensively understand the success of agriculture

diversiﬁcation.

Study Objectives

Objective 1: T o assess the significance of several types of goals that farmers pursue
when diverszﬁzing, recognizing potential signiﬁcant diﬂerences in the
types of goals pursued based on farm and farmer characteristics and

extent of diversiﬁcation.

The ﬁrst objective is accomplished by addressing four related questions: 1) What
are the goals that drive and inﬂuence farm diversiﬁcation?; 2) How do diversiﬁers assess
the importance of various goals when making diversiﬁcation decisionS?; 3) Are there
common factor patterns among the goals tested? and 4) Does the Signiﬁcance of
diversiﬁcation goals differ within farm classes, farmers proﬁles, and different levels of

farm diversiﬁcation?

While descriptive statistics determine the most signiﬁcant goals that inﬂuence
farmers and ranchers in their diversiﬁcation decision-making process, a factor analysis is
employed to reduce the several goals tested into a small set of underlying goal factors
according to underlying patterns of correlations that may exist among them. Chi-square

and analysis of variance (ANOVA) tests are used to identify Si gniﬁcant differences in the

29

 

relevance rating of goal factors among several farm, farmers and diversiﬁcation intensity

classes.

In relation to the ﬁrst objective, the following research hypotheses are developed

and tested.

1. A range of different types of goals, both ﬁnancial and non—ﬁnancial, plays a

role in the diversiﬁcation decision-making process.

2. Some goals have greater importance/weight than others in the overall

diversiﬁcation decision-making process.

3. The variation in importance is related to the characteristics of the farms and

ranches and the operators.

4. There is a correlation among diversiﬁcation goals and they can be factor

analyzed to identify diversiﬁcation dimensions.
5. The relevance/importance assessment of diversiﬁcation goals differs
signiﬁcantly depending on:
a. Farm classes: Size and structure

b. Farmer proﬁle segments: demographics (e. g., age, gender, education
level); on/off farm employment condition, family attachment to the

farm

c. Diversiﬁcation intensity groups: lightly, moderately and highly

diversiﬁed farms.

3O

Objective 2: T o evaluate the satisfaction of currently diversified farmers/ranchers with
the level of achievement of various diversification goals, identifying
significant diﬂerences in the “achievement satisfaction ” within segments

of farms, farmers and levels of diversification] 3.

Three research questions are addressed to achieve the second objective: 1) To
what extent are farmer/rancher initial goals for diversiﬁcation being accomplished? 2)
Are certain goals being achieved to a greater or lesser extent than other goals? and 3) Do
levels of goal accomplishment differ within farm classes, farmers proﬁles and

diversiﬁcation intensity?

Descriptive statistics are used to assess “achievement satisfaction” associated with
different diversiﬁcation goals. Chi-square and ANOVA are applied to identify the
signiﬁcant differences in the degree of accomplishment across types of goals and to
identify differences in “achievement satisfaction” levels across various types of

farms/ranches, farmers’ characteristics and diversiﬁcation levels.

Three research hypotheses, related to the second objective, are an element of this
study.
1. Diversiﬁcation results in positively perceived accomplishment of different

types of goals including ﬁnancial and non-ﬁnancial.

2. There are signiﬁcant differences in the levels of achievement satisfaction

associated with different types of diversiﬁcation goals.

 

'3 Refer to “Identifying Diversified Farms and Ranches in Texas” (p. 82) to see what constitutes the sample
ﬁame for this study and how it was developed.

31

 

3. Achieved satisfaction differs signiﬁcantly depending on:
a. Farm classes: Size and structure
b. Farmer segments: demographics (e.g., age, gender, education level);
on/off farm employment condition, family attachment to the farm

c. Diversiﬁcation intensity groups: lightly, moderately and highly

diversiﬁed farms.

Objective 3: To assess the actual level of accomplishment of several measurable

. . . . . 14
diverszficatzon goals among Texas diversiﬁed farms and ranches .

The research questions associated with this objective are: 1) To what extent are
the measurable diversiﬁcation goals being achieved? and 2) Are the farmers’ perceptions

of success consistent with their actual achievement?

Descriptive statistics are used to measure quantiﬁable goals. Chi-square and
ANOVA tests are applied to compare different levels of achievement across types of

farms and farmers.
The research hypotheses corresponding to the third objective are:
1. Objective indicators Show that diversiﬁcation is a successful strategy

2. Similar quantiﬁable levels of objectives achievement yield to dissimilar

success/failure assessments

 

'4 Refer to “Identifying Diversiﬁed Farms and Ranches in Texas" (p. 82) to see what constitutes the sample
frame for this study and how it was developed.

32

 

1.5 Definition of Terms

Agg'greneur: A person who organizes, operates and assumes the risk for diversiﬁcation
of an established or new enterprise (farm, ranch, processing, retail, restaurant) associated
with or derived ﬁom the growth, processing or value-added function of an

agricultural/ranching product, service or experience (Mahoney et al., 2004).

Entrepreneur: This study adopts Kaplan’s (2003) deﬁnition of entrepreneurship: “the
process of creating something different by devoting the necessary time and effort,
assuming the accompanying ﬁnancial, psychic, and social risks, and receiving the
resulting monetary rewards and personal satisfaction” (p. 13). According to the stated
deﬁnition, it is evident that diversiﬁed farmers ﬁt into the entrepreneurial class (in the

same sense, Nickerson et al., 1991).

M: According to the US. Census of Agriculture, this study deﬁnes the farm as “any
establishment from which $1,000 or more of agriculture products were produced and
sold, or normally would have been sold, during the census year” (USDA: National
Agricultural Statistics Service, 2004c). In this sense, farm includes other agricultural
ﬁrms with name variations, such as ranch or nursery (e.g., cattle ranch, seed nursery) that

are commonly used in the US.

Farm household: The farm household is the organization/enterprise that includes the
strategies and patterns of farm resources use, the interrelation and networks and the
reorganization of the way farming is combined with the other activities (Knickel and
Renting, 2000). Based on the interdependence between the ﬁrm’s proﬁt maximization

and the household’s utility maximization behavior, Benjamin (2004) uses the terms farm

33

and farm household synonymously's. In the same sense, this study gives identical
meaning to both terms -farm and farm household-, including the physical farm resources
but also the set of inter-relations that link the family farm members with the physical

farm resources.

Resource: Both, material and immaterial assets controlled by the [agricultural] ﬁrm

(Alsos et al., 2003).

1.6 Organization of the Dissertation

This dissertation is organized in Six chapters. This chapter describes the
agriculture context that iS encouraging the diversiﬁcation of farms and ranches. It also
deﬁnes the research problem and presents the study objectives, research questions and

hypotheses.

The next Chapter provides a comprehensive literature review regarding
agriculture diversiﬁcation, mainly studies conducted and developed in Europe and
Canada, but also some US. studies. Chapter II also addresses the goal-centered behavior
model summarizing the relevant goals identiﬁed in the farm diversiﬁcation decision-
making process. Furthermore, the second chapter reviews some evidence of success in

farm diversiﬁcation.

Chapter 111 describes the research methods applied in this study. It presents the
survey methods used to collect the data for this study, including the theoretical

population, sampling procedures, data collection and the actual survey instrument.

 

'5 Bowler et al., (1996) uses the said symbiotic relationship to name Farm Family to the form of agrarian
organization that includes the farm business and the farm household.

34

The characteristics of Texas diversiﬁed farms/ranches and their operators are
described in Chapter IV. This chapter also validates the agriculture diversiﬁcation
model, including detailed descriptions of the type and extent of diversiﬁcation and

veriﬁes the dynamic nature of diversiﬁcation.

Chapter V presents the results of the analysis conducted for the three study
objectives. Hence, this chapter ﬁrstly focuses on the types of goals that lay behind
diversiﬁcation and their signiﬁcance in the farmers/ranchers decision-making process. It
also identiﬁes the underlying patterns of correlations among the goals tested. Chapter V
also presents the assessment of the perceived achievement of the diversiﬁcation goals as

well as the speciﬁc measurements of the objectives accomplished though diversiﬁcation.

Finally, Chapter VI summarizes the study ﬁndings, discusses the limitations
encountered throughout the research, and offer some conclusions and suggestions for

future research.

35

CHAPTER II

LITERATURE REVIEW

Chapter two is organized in three sections. The ﬁrst section examines previous
studies concerning agriculture diversiﬁcation, mainly focusing on the types of enterprises
developed by farmers and the characteristics that are associated with the diversiﬁcation
process. Since the success of agriculture diversiﬁcation is deﬁned in this study as the
achievement of the goals pursued by farmers, the second section presents the goal-setting
model and the construction of the ‘Success’ deﬁnition. Section three reviews several
goals that have been identiﬁed as relevant in the farm diversiﬁcation decision-making
process. The ﬁnal section summarizes previous studies dealing with the success of farm
diversiﬁcation, either assessing the achievement of goals pursued or measuring

accomplishment in terms of Speciﬁc business objectives.

2.1 Farm and Ranch Diversification

Farm and ranch diversiﬁcation, also often labeled Alternative Farm Enterprise
(Bowler et al., 1996), has received academic attention in recent years“.
Notwithstanding, large gaps are still apparent in the literature. The most obvious gap is

the lack of commonly agreed deﬁnitions (Daskalopoulou and Petrou, 2002; Ilbery, 1991)

and measures of achievement/success.

 

'6 Although it’s recent academic attention, Carter (2001) and Ilbery (1991) report that farm diversiﬁcation
is not a recent phenomenon.

36

The ﬁrst discrepancy regarding the scope of diversiﬁcation deals with its
conﬁrsion related to pluriactivity. Pluriactivity is the generation of additional income [for
the farm household] from more than one activity, including both on-farm enterprises (i.e.,
farm diversiﬁcation) and farmers’ off-farm employment (Alsos et al., 2003; Ilbery et al.,
1998). Although most recent studies recognize the difference between pluriactivity and
farm diversiﬁcation (e.g., Damianos and Skuras, 1996; Evans and Ilbery, 1992; Ilbery,

1991), others often treat both concepts as synonymous (e.g., Benjamin, 1994).

According to Ilbery (1991), the discrepancy regarding off-farm employment
arises whether the farmers’ labor is deﬁned as a resource of the farm business or a
resource of the farm household. When the farmers’ labor is conceptualized as a
component of the farm business, diversiﬁcation includes off-farm employment.
Conversely, deﬁned as a farm household resource, off-farm employment is excluded

ﬁom diversiﬁcation.

Taking into consideration the recognized interdependency between farms and
farm households (see p. 33), the demarcation line between farm and farmhouse resources
becomes blurry. This study distinguishes pluriactivity from farm diversiﬁcation based on
the location where the farmer’s labor is input (i.e., on-farm vs. off-farm) instead of on the
nature of the labor (i.e., farm or farm household resource). Hence, this study adopts an
[on] farm-centered approach, excluding off-farm employment from the deﬁnition of

diversiﬁcation (in the same sense, Evans and Ilbery, 1992).

A second element of ambiguity occurs when diversiﬁcation is deﬁned as the
adoption of alternative or non-conventional enterprises, revenues, products or services

because of the uncertainty of the terms that comprise these deﬁnitions. For example,

37

Daskalopoulou and Petrou (2002) gives a time-dimensional approach to said terms
deﬁning alternative as anything used opposed to present-day conventional [agriculture]
production practices and process. On the other hand, Damianos and Skuras (1996) take a
geographical-centered approach, limiting alternative farming to enterprises that are not
traditional in a given region. Problems of consistency and comparability arise because
diversiﬁcation is a relative concept depending on the practice or system that it is

compared to (Daskalopoulou and Petrou, 2002).

However, the ontological debate of the alternative and conventional agriculture
paradigms presented by Beus and Dunlap (1990) shows a more complex View than the
regional and Spatial approaches usually found in the farm diversiﬁcation literature. The
authors contrast alternative vs. conventional agriculture based on Six core elements that
are helpful to better understand the deﬁnitional attributes of alternative farming. First,
alternative agriculture promotes the decentralization of power and control, encouraging
more farmers with dispersed control of land, resources and capital. Alternative farms
have a more local/regional production, processing and marketing. Second, alternative
agriculture seeks independence ﬁ'om external sources of energy, inputs and credit, relying
more on personal and community knowledge and skills and also on local expertise and
capabilities. Third, alternative agriculture contributes to strengthening communities and
often results in cooperation amongst different actors involved, preservation of farm and
rural culture with a primary emphasis on permanence, quality and beauty. Alternative
agriculture farm work provides ﬁnancial and life-style rewards. A fourth attribute of
alternative agriculture (i.e., harmony with nature) is that nature is understood as essential

to agriculture while humans are part of and subject to nature, caring about resource

38

conservation and production of naturally nutritious food. Fifth, based on the several
values of diversity (e. g., building of soil fertility, decrease of vulnerability before
agricultural prices and other market disruptions), agriculture diversity searches for a
broad genetic base, polyculture, crop rotation, integrated systems of crops and livestock,
locally adapted production systems and holistic systems integrating science and
technology. Restraint, the sixth element in Beus and Dunlap’s conceptualization of
alternative agriculture entails the inclusion of all external costs of production and
recognizes the importance of short-term as well as long-term goals for the conservation

of resources.

Given the multi-dimensionality of Beus and Dunlap’s conceptualization, it is
difﬁcult to clearly determine boundaries of alternative (i.e., diversiﬁcation) farming. A
wide variety of activities, services or products is consistent with their view of
diversiﬁcation. Taking this into consideration, this study considers farm diversiﬁcation to
include any activity or product adopted on the farm that can bring additional revenues to
the farm household (Barlas et al., 2001). In this sense, agriculture diversiﬁcation includes
any activity, service or product developed on the farm resulting from the combination of
any of a variety of farm resources, including -but not limited to- land, labor (hence, farm
household labor), capital, entrepreneurial ability, and business and marketing systems.
While the product or service is produced completely or primarily on the farm they may

be marked and distributed off-farm.

Taking into account the USDA’S deﬁnition of a farm used in this study (see p.
32), the deﬁnition of agriculture diversiﬁcation relates to activities, products or services

produced on working farms or ranches. That is, where the farm purpose is to produce

39

agricultural products and not only to produce a scenic landscape, habitats for recreational
settings for personal engagement. Nor does this study’s deﬁnition of diversiﬁcation
include farms or ranches that are developed primarily as tourist attractions that are not

dependent, or may not even produce, agricultural products.

Categories within Farm Diversification

Development of different typologies is a crucial element of rural sociology
(Whatmore et al., 1987). Agriculture diversiﬁcation is no exception and this is evident
by a number of different attempts to classify agriculture diversiﬁcation. Commonly, a
starting point for many typologies is dividing farms into non-traditional agriculture and
non-agricultural enterprises (Bowler et al., 1996). In turn, each group is subdivided into

various sub-types.

Non-traditional agriculture is consistently divided in the European literature into
two categories: Conversion and Extensification (Barlas et al., 2001; Damianos and
Skuras, 1996). Conversion refers to the adoption of any crop/livestock or any variety that
is new or unusual for farmers in a given region”, such as growing specialty products
(e. g., mushrooms, culinary herbs). However, Conversion Should also include the
adoption of unusual agricultural practices as a means to achieve one of the goals of
alternative agriculture as argued by Beus and Dunlap (1990), such as the use of
alternative sources of energy for agriculture production. Extensification refers to the

reduction of the production level, such as organic agriculture, free-range pastures and

 

'7 Some early Studies regarding agriculture diversiﬁcation excluded unconventional crops and livestock
from diversiﬁcation (e.g., Grifﬁts, 1987, cited by Ilbery, 1991)

40

afforestation practices. Although extensiﬁcation may appear contrary at ﬁrst to
diversiﬁcation and its pmpose to increase farm revenues, Knickel and Renting (2000)
report that the higher price paid for organic products added to the reduced costs of inputs
lead to an increase in net farm revenues of around ﬁfteen percent. So, some farms can
actually reduce agricultural production, and reduce the negative extemalities associated
with some production practices, and actually increase total and net revenues. While
extensiﬁcation is not a required aspect of diversiﬁcation, many diversiﬁed farms focus on
the net revenues and other beneﬁts when determining production practices rather than
focusing on maximizing output.

Non-agricultural enterprises have also been sub-divided in several categories
based on their wide variety of non-agricultural uses of the farm’s resources that are
offered to the public. However, studies Show dissimilarities in the types of enterprises
(i.e., categories) most frequently found in farms and ranches. For example, Bowler et al.
(1996) concluded that tourism and contracting were the most predominant enterprises
(31% and 20% respectively) offered by farmers in England. Conversely, Mahoney and
Barbieri (2003) developed seven categories of non-agricultural enterprises, identifying
many examples for each category throughout the United States and Canada. Non-
agricultural enterprises of this model include: new marketing and distribution; recreation,
tourism and hospitality, historic preservation and adaptive re-use; leases, easements and
time-shares; contracts and services; expertise, consulting and education; and value(s)

added to existing products.

The variety of categories proposed through the literature suggests that said

categories should not be interpreted as exhaustive but demonstrative of the wide range of

41

enterprises that farms and ranches can develop (in the same sense, Ilbery, 1991). The
following paragraphs describe the different types (i.e., categories) of non-agriculture

enterprises that the literature compiles.

Most studies identiﬁed tourism and lodging as an important type of non-
agricultural enterprise offered in farms. For example, McGehee and Kim (2004)
identiﬁed 987 farms in Virginia that were offering at least one type of tourism or lodging
services. Understood as the provision of tourism and accommodation services within a
working farm environment, farm/ranch tourism or agritourism includes a wide variety of
activities and services, such as farm stays, Bed and Breakfasts (B&B), cattle drives, u-

pick-up, farm tours, special events, hunting and ﬁshing, and wine tasting.

Value-added is another category widely found in literature, although there are
differences in deﬁnitions and perceived extent. Most studies include value-added
processing as well as the direct marketing of agriculture products in this category (e. g.,
McNally, 2001; Ilbery, 1991), while Mahoney and Barbieri (2003) separate them”. This
study supports separating value-added processing and marketing as different
diversiﬁcation enterprises, taking into consideration that Ilbery (1991) reported that direct
marketing was the most frequent diversiﬁcation related activity in the 120 farms that
were studied in the United Kingdom. Processing includes a wide variety of activities, in
a continuum with simple processes at one end (e.g., dehydration of ﬂowers and herbs)
and very sophisticated processes at the other end (e.g., wineries). In turn, direct

marketing includes several strategies such as farm gate sales, on-farm Shops and recently

 

'8 In addition, Ilbery (1991) reports that an early study of agriculture diversiﬁcation excludes those
diversiﬁed activities that are directly related to the crop/livestock production such as value-added
processes.

42

on-line orders and virtual markets. Most deﬁnitions also focus on value added/ gained by
the farmer or rancher associated with additional processing of agricultural products.
However, in reality it Should be deﬁned as value(s) added, recognizing the potential and

large beneﬁts of adding social, environmental and community values.

Agricultural contracting and services19 is another category found in the literature
(Mahoney and Barbieri, 2003; McNally, 2001; Bowler et al., 1996). Contracting and
services is the use of—other than labor— farm resources in favor of other farmers or non-
agricultural agents (e. g., public). This category appears very frequently in England and
Wales according to two studies: Bowler et al. (1996) found that 20% of the 2,700 farms
surveyed reported a type of contracting, and McNally (2001) found contracting as the
most common type of diversiﬁcation (40%) and the only category that increased over

time.

Several authors include passive diversification (i.e., leasing/rentals of land and/or
buildings) as another category of diversiﬁed enterprises (e. g., Mahoney, 2002; Ilbery,
1991). McNally (2001) found that thirty percent of the farms studied in England reported
renting out farm buildings. Examples include the lease of the farm for hunting purposes
or for Special events, and the lease of a given infrastructure (e. g., cider mill for
processing). This study suggests that passive diversiﬁcation should also include the lease

or rental of the farm equipment.

Mahoney and Barbieri (2003) include two additional categories in their farm
diversiﬁcation model. First, Historic Preservation and Adaptive Re-use, deﬁned as the

adaptation of historic infrastructure and resources for an actual use, giving an additional

 

'9 Also called Hirework (McNally, 2001)

43

value to the resource. Examples include the restoration of old barns and conversion into
dance or events theaters, deployment of antique tractors for hayrides, and adaptation of
historic cottages for accommodation. Second, Expertise, Consulting and Education,
which includes the wide spectrum of educational activities that the farmers can provide to
others based on their agricultural or professional expertise. Examples include workshops
for wool processes (e.g., shearing and ﬂeecing), herbal teas classes and sustainable
farming practices seminars. A very large number of farms and ranches are offering

internships.

Although the intention is to develop a classiﬁcation of farm diversiﬁcation, the
categories proposed in various models must be viewed as interdependent and not
mutually exclusive (Ilbery, 1991 ). That is, certain activities ﬁt in more than one
category. For example, wine tasting ﬁts within farm tourism and also within direct
marketing. In addition, some studies reveal that farmers prefer to stick with only one
category of diversiﬁcation, although develop several activities within that category
(Ilbery, 1991). For example, farms offering farm tourism through several activities, such
as hayrides, petting zoo, farm tours and special events. The different diversiﬁcation
enterprises should also be viewed as mutually supporting product lines that increase the

draw and attraction of diversiﬁed farms.

Figure 2.1 summarizes the categories and sub-categories of farm diversiﬁcation

found in the literature.

 

 

 

 

 

 

Figure 2.1. Categories and Sub-categories within Farm Diversiﬁcation
Source: Adapted from Bowler et al. (1996) and Mahoney and Barbieri (2003)

Attributes Associated with Farm Diversification

Three types of attributes have been associated with farm diversiﬁcation and
efforts to classify diversiﬁcation: farm characteristics (e.g., commodity produced and
farm size), farmer/farm household’s proﬁle (e.g., demographics, family cycle), and
environmental attributes (e.g., closeness to major roads, change of policies). It is
important to state that although some general characteristics are often related and
correlated to farm diversiﬁcation, a complex and very speciﬁc farm attributes trigger the

development of farm alternatives enterprises (Ilbery et al., 1998).

Farm Characteristics Associated with Diversi cation:

Farm diversiﬁcation and types of diversiﬁed enterprises are often found to be

related to both physical and tenure attributes of the farm. Several studies have focused on

45

the relationships of farm size and diversiﬁcation. Most studies conclude that larger farms
are more likely to diversify because of their access to ﬁnancing and non-ﬁnancial
resources, such as capital for investments, natural resources and infrastructure for re-use
(e.g., McNally, 2001; Ilbery, 1991; Anosike and Coughenour, 1990). However,
Damianos and Skuras (1996) found that total arable land available negatively inﬂuences
the farmers’ decision to adopt an alternative farm enterprise, concluding that the
probability of adopting an alternative enterprise on farm falls by 28.6% as the mean size

of arable land increases by 20 hectares.

One problem associated with the efforts to relate diversiﬁcation to farm size is
that there are alternative measures of size. While some studies deﬁne farm size
according to the total farmland (e.g., Ilbery et al., 1998; Ilbery, 1991), others deﬁne it
based on the farm net income (e.g., McNally, 2001) or even with the combination of

arable land and farm gross proﬁts (Damianos and Skuras, 1996)”.

The relationships between farm size and types of diversiﬁed enterprises
developed have also been studied. The studies result in contrary ﬁndings. For example,
in a study conducted in England, Ilbery (1991) found that there are no signiﬁcant
differences between size and types of diversiﬁed enterprises, although the number of
diversiﬁed activities tends to increase with farm size. Conversely, other studies in
England and Wales concluded that contracts, services, processing and rentals of farm
buildings more likely occur on large farms, indicating that higher level of farm resources

(e.g., buildings and machinery) provides greater advantages for diversiﬁcation (Bowler et

 

2° Whatmore et al., 1987a suggest that typologies must consider political and economic factors because, for
instance, particular economic characteristics (e.g., proﬁts) or technological conditions can make two
farms with the same acreage belong to different classes.

46

al., 1996 and McNally, 2001). In Greece, Damianos and Skuras (1996) reported that
large-sized farms are more likely to move farmers toward conversion (i.e., adoption of
unconventional crops/livestock), while less likely to move toward structural
diversiﬁcation. Regarding farm recreation and tourism, some studies show that smaller
farms have greater incidence of farm accommodation (Bowler etal., 1996), while others

conclude that farm size is strongly correlated with types of recreation opportunities

developed (McNally, 2001).

Research has showed an association between diversiﬁcation and the mode of
agriculture production. It is obvious that diversiﬁcation is more likely observed on less
specialized (less intensive) farms, because either farmers have more time and capital to
allocate to diversiﬁed activities, er there is a greater market opportunity (McNally, 2001;
Ilbery, 1991). In addition, Ventura and Milone (2000) report that diversiﬁcation more
likely occurs on farms with seasonal production because labor/time is available in the off-
season to develop and manage diversiﬁed enterprises. Also, there is greater need to

generate non-agriculture related revenues during the off-season.

Some relationships between commodities produced and types of diversiﬁcation
have also been observed. Bowler et al. (1996) found a greater development of fat cattle
production in diversiﬁed farms compared to conventional farms. Furthermore, McNally
(2001) concluded that cereal farms are more likely to rent buildings and to engage in
hirework and less likely to engage in recreation, while horticultural ﬁrms are more likely
to engage in retailing and less likely in other activities. These conclusions may suggest
that diversiﬁers allocate their existing resources to the most adequate use (i.e., diversiﬁed

enterprise) according to the needs or requirements of the enterprise to be developed.

47

Regarding farm structure, Anosike and Coughenour (1990) found that the land
tenure is negatively correlated to diversiﬁcation. Also, McNally (2001) found a positive
relationship between whether the farm is classiﬁed as a non-family business (i.e., other
partnership, limited company) and the probability of engaging in all types of
diversiﬁcation, except the development of crafts enterprises (no relationship) and
hirework (negative relationship)”. These ﬁndings are sustained by the fact that non-
family businesses may be larger, more specialized and less in need to diversity to

increase their revenues.

Diversiﬁcation has also been shown to be correlated with the farm managerial
structure. Using the amount of hired labor as an indicator of the managerial and
organizational abilities of the farmer and holding size, Damianos and Skuras (1996)
concluded that farms that depend extensively on hired labor are more likely to diversify.
Interestingly, Bowler et al. (1996) found that diversiﬁed farms have greater debts than

conventional farms, although there were no differences in the total size of proﬁts”.

E_armer and Farm Household Proﬁle Associated with Diversiﬁcation:

Characteristics of the entrepreneur are a focal point in the farm diversiﬁcation
literature. Previous studies indicate that diversiﬁed farmers are not generally young new
entrants into farming, but more likely to be people with considerable farming experience

and traditional family farming backgrounds (Ilbery, 1991). Furthermore, diversiﬁers

 

2‘ Conversely, Anosike and Coughenour (1990) concluded that the form of the farm organizations is not
correlated with conversion.

22 The author found out though that diversiﬁed farms have higher proﬁt levels per hectare of farmland than
conventional farms.

48

describe their farms as being their only current occupation, suggesting that the expansion
of the farm business into non-farm activities does not diminish the perception of the farm
as the main income-generating activity (Carter, 2001). However, preliminary research as
part of this study indicates that these ﬁndings may not be true for many diversiﬁed

farmers and ranchers in the US. and Canada.

Studies report that overall, the farmer’s age and education do not appear to be
correlated to the development of alternative farm enterprises (McNally, 2001; Anosike
and Coughenour, 1990; Damianos and Skuras, 1996)”. However, diversiﬁers seem to
have a high level of disposition towards skills acquirement and expertise outsourcing.
For example, Carter (2001) found that diversiﬁers were more likely to have undertaken
agriculture and management training and to employ agricultural management consultants
than non-diversiﬁed farmers. Similarly, Ilbery (1991) found that over 50% of those
having farm accommodation diversiﬁcation sought market research. These ﬁnding

suggest that they are more entrepreneurial in nature.

Family structure seems to have an effect on diversiﬁcation. Regarding farm
household structure, it has been found in some studies that the number of family
members (excluding spouses) working on the farm has a positive relationship to
diversiﬁcation, except passive diversiﬁcation (i.e., rental and leasing) suggesting that

diversiﬁcation is a strategy that either utilizes or provides employment for family

 

23 However, McNally (2001) reports that older farmers are less likely (3%) to offer services to others and
Anosike and Coughenour (1990) found out that education is positively correlated with the adoption of
non-conventional crops/livestock In turn, Ilbery er a1. (1998) found age differences between tourism
and accommodation activities.

49

members24 (McNally, 2001; Damianos and Skuras, 1996). Conversely, Bowler et al.
(1996) did not ﬁnd any signiﬁcant differences in the extent to which family labor is

employed between alternative and conventional farms.

Regarding farm family cycle, Damianos and Skuras (1996) found a higher
number of children living on diversiﬁed farms, suggesting that diversiﬁcation may be
more likely in the early stages of the family life cycle. The authors concluded that the
probability of adopting any diversiﬁed enterprise was about 10% higher for each
additional child living on the farm. Furthermore, Ilbery et al. (1998) conclude that
alternative enterprises do not tend to be adopted by couples with children younger than
six years of age.

Gender and the role of the farmer’s wife as it relates to diversiﬁcation have
received considerable attention in the literature. This attention is consistent with the
crucial role that female spouses and signiﬁcant others play in the establishment and
operation of diversiﬁed enterprises (Ilbery et al., 1992). For example, McNally, (2001)
showed that the probability of observing tourism activities on the holding increases by
twelve percent (12%) when the spouse is present, ﬁnding also positive associations with
retailing and recreation. Conversely, the author found a negative relationship with
hirework and rentals and the spouse presence. However, Damianos and Skuras (1996)

reject the said association in a study conducted in Greece.

 

24 According to the author, the result regarding passive diversiﬁcation is consistent with the hypothesis that
rentals and leases do not create job opportunities.

50

External Farm Environmental Characteristics Associated with Diversiﬁcation:

The external farm environment, the institutional complex associated with farm
policy, (e. g. education and training), market and capital structures, state regulation,
farmers’ organizations, farming interests, science and technology is important and
obviously impacts motivations and support for diversiﬁcation (Barlas et al., 2001).
Location of the farm is the most studied environmental attributes that may affect farm

diversiﬁcation.

Research has shown a strong association between diversiﬁcation and closeness to
main roads and urban ﬁinges. For example, Damianos and Skuras (1996) state that
according to previous studies, the probability of diversiﬁed farms occurrence decreases
by 18% as the distance ﬁ'om a main road increases by 10 km. This correlation is not
surprising taking into consideration the importance of “short chains” in the development
of new food systems and the market supply/demand for products, labor and networks in
urban areas (Knickel and Renting, 2000). However, there is no research showing that ‘

“success ” depends on distance to roads.

Studies also reveal that the location of the farm is associated with the type of
alternative enterprise. For example, Ilbery (1991) concluded that value-added processes
were more frequent in England inner areas, while fann-based recreation was generally
found further out in the outer ﬁinge. In the same sense, McNally (2001) found that farm
tourism is more likely to occur in less developed/favored areas, contrary to the other
types of diversiﬁcation, being the retail-diversiﬁed activity with the strongest negative
coefﬁcient of correlation. Again, these results are expected because the external context

(e.g., rural landscaping) plays a major role in some alternative enterprises (e.g., farm

51

tourism) while closeness to the urban boundaries is an advantage for other activities (e.g.,
direct marketing). Obviously, there is interplay of distance from and access to markets

and diversiﬁcation.

Finally, there is also evidence of spatial concentration of certain activities in
certain areas. For example, Ventura and Milone (2000) report clusters of farm butcher
shops in Umbria (Italy) that encouraged the spread of butcheries networks and the
development of other Chianina” products. Likewise, Ilbery (1991) found a
preponderance of horsiculture activities in the urban ﬁinge of West Midlands (U .K.).
Said clusters, especially in cases of product innovation, are extremely advantageous for
the farmers because they facilitate the information exchange, processing and marketing
through networks development as well as customer recognition (Knickel and Renting,

2000).

Table 2.1 summarizes the associations found between farm diversiﬁcation and

several attributes of the farm, farmer and the environment.

 

25 Chianina is a local beef breed, traditionally used for traction, although lately the breed has proven to be
a superior source of meat.

52

Table 2.1 Summary of the several correlations found among farm, farmer/farm
household and environmental attributes and farm diversiﬁcation and types

 

 

 

 

of diversiﬁcation.
Attributes Farm Diversification Types of Diversification
Farm Attributes
Size + - 1 + -
Agriculture Production
Specialization - N/A
Seasonality + N/A
Farm Structure
Land tenure - N/A
Non-Family Farm + +
Management Structure
Hired Labor + N/A
Amount of Debts + N/A
FarmerlFarm household Attributes
Agriculture/Management training + +
Family workers working on-farm + 0 2 +
Number of children living on-farm +
Role of farmers wife None + -
Environmental Attributes
Closeness to main roads/urban fringes + + -

 

; Positive and negative correlations were found
Positive correlations and no correlation were found

2.2 The Roles of Goals in Farm Diversification Decisions: A Theoretical Approach

Goals (i.e., objectives) are'intemal representations of desired outcomes, events or
processes (Austin and Vancouver, 1996). According to the Theory of Goal-Setting, the
individual’s conscious goals govern his/her behavior (Homsby and Kuratko, 2002). In
the same sense, the literature generally concludes that goals have a signiﬁcant role in the
entrepreneurial behavior, both in the decision-making process (Gasson, 1973) and in

venture performance (Kuratko et al., 1997).

53

The Role of Goals in the Diversiﬁcation Decision-Making Process

According to a sociological approach, socio-cultural processes affect individual’s
goals (Austin and Vancouver, 1996). Speciﬁcally regarding farm decision-making
processes, such socio cultural processes can have internal as well as external roots (i.e.,
stimuli). External stimuli are, for example, the changes regarding macro economy (e.g.,
new market trends, declining demand/prices), political environment (e.g., new rural
policies) and in the societal structure (e.g., increase role of women in society) (Bowler et
al., 1996; Ilbery et al., 1998; Damianos and Skuras, 1996). Conversely, internal stimuli
that inﬂuence goal construction include the economic and social changes that may occur
inside the farm affecting the allocation of resources for production processes, such as
variations in the farm proﬁtability rates, labor relations and even in the family life course
(Ibid.).

Two elements of the goal structure are relevant to this study: its hierarchical
property and its importance/commitment dimension. The hierarchical property implies
that each individual has several goals that are hierarchically and sequentially organized,
with few higher-order goals at the peak and several lower-order goals (subgoals) at the
bottom (Austin and Vancouver, 1996). Therefore, it can be hypothesized that farmers
can have several goals for their diversiﬁcation behavior and decisions and these goals do

not all have the same level of importance.

The importance/commitment dimension means, that the level of importance for
the same goal or goal set can and often will differ across individuals. Second, that the
goal importance determines the goal commitment (Austin and Vancouver, 1996).

Commitment refers to the individual’s attachment to a goal, implying how long and how

54

diligently an individual is willing to strive for a speciﬁc goal and the unwillingness to
abandon (or lower) said goal over time (Slocum et al., 2002). This includes how much

and for how long they were willing to invest.

Once a set of goals is established, the farmer will purposely decide on behaviors
(e.g., enterprises, investments) to achieve them. Consistent with the actor theory, it is the
farmer/farm household who will ultimately decide the necessary farm adjustments to
respond to their perceptions of their agriculture contextual (e. g., Rob and Burton, 2004;
Barlas et al., 2001; Ventura and Milone, 2000; MacFarlane, 1996; Bryan, 1989;
Whatmore et al., 1987b). Recall that as previously discussed, farmers can adopt several
strategies“. Therefore, farmers will choose the path that seems most consistent and
appropriate to achieve their goals based on their assessment of the farm reality (e.g.,

resources, external context).

The Role of Goals in the Diversiﬁcation Performance

A second role that goals play in the entrepreneurial behavior is related to the
venture performance and hence to Success and Failure constructs. Goal-directed
behavior results in an outcome (i.e., emotion) that in turn may affect subsequent attitudes
and motivations (Slocum et al., 2002). An actual or perceived positive outcome (i.e.,
Success) has a crucial role in the sustainability of a certain course of entrepreneurial
behavior (Kuratko et al., 1997). Positive outcome --contrasting entrepreneurial goals to

actual or perceived achievement (i.e., meeting or exceeding personal relevant goals)--

 

26 The multiple choices that farmers can choose from is consistent with the property of equiﬁnality,
meaning that goals can be achieved through multiple means (Austin and Vancouver, 1996).

55

 

 

 

reinforces the entrepreneur behavior either within the on-going enterprise or through the
development of a new venture(s). Conversely, a negative outcome can lead to the
disengagement of a venture. Hence, to be successful, individuals must translate goal-
directed behaviors into achieved goals (Slocum et al., 2002). Achievement will also
inﬂuence word-of-mouth concerning the beneﬁts associated with an entrepreneurial

venture.

The assessment of “Success” incorporates three dimensions of goals. First,
farmers are motivated by a set of goals that are hierarchically organized. Second, these
goals can be related to different outcomes (e.g., ﬁnancial and non- ﬁnancial). Third, each

goal has different relative importance for the diversiﬁer.

Failing to adequately understand and apply this three dimensional perspective can
lead to incorrect assessments concerning the “success” and “failure” of diversiﬁcation
enterprises”. Evidence suggests, for example, that ﬁnancial “failure” (i.e., little or no
economic returns) of diversiﬁcation may not imply entrepreneurial failure or vice versa.
According to Kuratko et al. (1997) some entrepreneurs continue to pursue their business
venture in spite of adverse events or lack of ﬁnancial success. Moreover, Lynn and
Reinsch (1990) found out that although positive ﬁnancial performance and owner
satisfaction were signiﬁcantly and positively related, most entrepreneurs indicated that
they would repeat an unproﬁtable diversiﬁcation or forego a proﬁtable one because they

achieved other goals.

This literature suggests that the assessment of entrepreneurial success requires a

comprehensive evaluation of the accomplishment of the various types of goals with

 

27 For example, McNally (2001) suggests that the little economic rewards of diversiﬁcation appear as a
failure of the strategy.

56

 

different importance that entrepreneurs pursue through their venture. Taking into account
the central actor role of farmers, the signiﬁcance of goals in the decision-making process
and entrepreneurial sustainability, and the complex structure of the goal setting, this study
deﬁnes success as the satisfaction of the initial goals that agripreneurs pursued taking into
account the complexity (i.e., typologies and level of importance) of the farm

diversiﬁcation goal set.

Figure 2.2 shows the model that this study will use to assess the success of farm

diversiﬁcation in Texas.

 

Positive Perception of Goal Achievement
‘ ‘ ‘ ¢ - I
‘ ‘

Hierarchical
Organized
g: i

/

 

 

‘
Importance]

l Success

 

 

” Set of ‘ Goal-Directed“? _f """"
gGoals .93 g I Behavior f I?
. Wm? area-immerse) C
\ l Failure
: ‘

‘((-‘.

Negative Perception of Goal Achievement

 

 

 

Figure 2.2. Goal-Directed Behavior Model

2.3 Goals Behind Entrepreneurship and Diversification

Literature identiﬁes several types of goals that entrepreneurs and speciﬁcally farm
diversiﬁers seek to achieve through diversiﬁcation ventures. Diversiﬁcation goals can be
arranged on a continuum with very personal (i.e., intrinsic) goals at one end and purely
ﬁnancial goals at the other end. This section reviews the several types of goals identiﬁed

in literature for entrepreneurs in general and then for farm diversiﬁcation.

57

Lynn and Reinsch (1990), in a study conducted with 280 Texan entrepreneurs,
found that the most common reasons behind diversiﬁcation was the ﬁrm’s ﬁnancial
growth, followed by creating an opportunity to the spouse. Other frequent goals
identiﬁed were related to the market environment, such as meeting a need in the market,
building on an existing market position, meeting the requests for/from several customers

and providing a variety of products and services.

In turn, Kuratko et al. (1997) identiﬁed sixteen goals that, when achieved,
motivated Midwestern entrepreneurs to sustain their business venture. The authors
classiﬁed those goals according to four factors founded in the types of rewards that the
entrepreneur is aiming at through business development. Extrinsic Rewards includes
several -and most frequently reported- goals closely related to economic or ﬁnancial
beneﬁts. Examples include (personal and ﬁrm) ﬁnancial enhancement, building equity
and the increase of income opportunities. Conversely, the Intrinsic Rewards embraces
several psychological values that the diversiﬁer pursues. This category includes, for
instance, task accomplishment, subjective compensation (e.g., public recognition),
personal growth, meet a challenge, and leisure related aspirations (e.g., enjoyment and
excitement). The third factor, independence/autonomy, is related to the values related to
being “ones’s own boss”. This class includes maintaining personal (and business) control
and freedom through self-employment. At last, family security, refers to the several goals
that focus on the protection and/or enhancement of the loved ones. This category
includes building a business to pass on to next generations, the creation of employment

for family members, and keeping alive a several-generations ﬁrm.

58

Speciﬁc studies related to goals pursued with farm diversiﬁcation conﬁrmed those
goals identiﬁed in the entrepreneurial literature, including that agripreneurs are not only
economically/ﬁnancially driven. Instead, agripreneurs are motivated to achieve a wide
variety of economic as well as non-economic goals (e.g., McGehee and Kim 2004).
Although there is similarity between the goals pursued by non-agriculture entrepreneurs
and the ones pursued by the agripreneurs, it is reasonable to expect that certain goals

relate exclusively to farm diversiﬁcation.

First, agripreneurs appear to be highly motivated by their farm identity and their
relationships with the farm. In one of the pioneering studies regarding goals and values of
farmers, Gasson (1973) found that relevant goals that farms strive toward are centered on
the value of being a farmer (e.g., belong to the farming community and the prestige of
being a farmer and continuing family traditions). Rob and Burton (2004) contend that an
important factor in diversiﬁcation decision-making is “the meaning of life. Farmers want
to farm. It gives them their identity and their sense of achievement (. . .) Farmers see
themselves as food producers” (p. 9). In the same sense, Getz and Carlsen (2000) found
that the economic motivation (i.e., farm revenues improvement) behind agri-tourism

development in Australia was not an end per se, but a means to support rural lifestyles.

Second, some diversiﬁed farmers may be inﬂuenced by goals that are supported
by the business structure. Getz and Carlsen (2000) summarize previous evidence
concluding that family business goals are different from the ﬁrm-value maximization
goals usually pursued by publicly traded and professionally managed ﬁrms because they
are more oriented to the satisfaction of personal, family or lifestyle goals. Further, it is

not uncommon that family businesses accept lower returns or longer paybacks on their

59

investment to sustain a lifestyle. In addition, Lynn and Reinsch (1990) conclude that

intrinsic reasons are often more associated to owner-managed companies.

Studies regarding the goals that are most relevant and important in the
diversiﬁcation decision-making process are not conclusive. While some studies show
that goals linked to external environmental factors (e.g., economic and market changes)
are more important than those that are related to internal factors (Bowler et al., 1996;
Ilbery, 1991; Nickerson et al., 1991), others conclude that lifestyle and family-related

reasons were predominant goals behind farm diversiﬁcation (Getz and Carlsen, 2000).

The strong relevance of economic reasons behind farm diversiﬁcation is
consistent with the economic rationality of farmers”. For example, farmers diversify to
deal with decreased prices they receive, increased operating costs and reduction of
agricultural proﬁts. Other farmers, especially those located close to urban fringes, also
diversify to help compensate and allow them to pay for the property tax increases

resulting from residential developments (N ickerson et al., 1991).

However, there is also rationality for the importance assigned to non-economic
goals for farm diversiﬁcation. According to Gasson (1973), farmers may choose to
maximize satisfaction within a given preferences system rather than maximizing income.
The ‘satisﬁcing’ concept suggests that farmers and ranchers do not necessarily indulge in
economically optimal decision-making, but instead may optimize social, intrinsic and/or
expressive goals (Rob and Burton, 2004). In addition, Nickerson et al., (1991) conclude
that the high importance assigned to non-economic reasons is evidence of the desire to

keep the family farm operation sustained by the farmers’ perception of agriculture as a

 

28 According to Gasson (1973), [farmers] rationality is deﬁned as a goal-directed behavior.

60

way of life rather than a career or job. In similar sense, McGehee and Kim (2004)
conclude that social motivations prove that agritourism is sustained to attain the rural
lifestyle. Furthermore, the farmers’ goal of providing employment to family members

reﬂects the farmers’ desire to pass the farms on to heirs (Evans and Ilbery, 1989)”.

Relevant Goals behind Farm Diversifiers

Various goals have been identiﬁed relevant in the agripreneur’s decision-making

process. Agripreneurship goals can be grouped into four general categories.

First, economic/ﬁnancial goals appear to be very important in diversiﬁcation
decision-making especially related to agritourism (e. g., McGehee and Kim, 2004; Busby
and Rendle, 2000). Bowler et al. (1996) found that the three most important reasons for
diversifying farms were: a) To maintain or increase the income generated by the farm
business (66%); b) reactions toward a market opportunity (22%); and c) to exploit an

under-utilized farm resource (22%).

Similar results were found for farms and ranches offering agritourism activities”.
In a study of 987 farms offering agritourism in Virginia, McGehee and Kim (2004) found
that ‘additional income’ had the highest mean in importance score with lowest standard

deviation followed by ‘fully utilizing farm resources’. The same conclusion regarding

 

29 Evidence suggests that the disposition of the business among family members is not a broadly extended
farm path. According to Getz and Carlsen (2000) there are only a few cases of succession in Australia
because children see the business as too difﬁcult and less rewarding and because children are alienated
by the parents’ management style.

3° Nickerson et al., (1991) report that ‘to cope with the agriculture income ﬂuctuation’ was not a primary
motivation reported by farmers because the agriculture production was not the primary income source of
most participants.

61

the importance of the additional income goal was drawn in a study undertaken among

707 farms and ranches in Montana (Nickerson et al., 1991).

Interestingly, the levels of farm indebtedness appear as a strong motivation to
diversify the farm operation. Comparing different business paths among diversiﬁed
farmers, Bowler et al, (1996) found that the amount of farm debt has a signiﬁcant role in
the adoption of non-conventional products (lower debt levels) and developing other
‘industrial’ enterprises (higher levels). One of the important economic goals for

diversiﬁers may therefore be to speciﬁcally decrease the farm debts.

Opportunity to “close—by market” appears as another economic purpose triggering
farm diversiﬁcation. Ilbery (1991) concluded that 82% of the diversiﬁed farmers
interviewed reported that the proximity to a major urban market did inﬂuence their

decision to develop an alternative enterprise (second most important reason).

The literature that was reviewed, veriﬁed the importance of intrinsic goals in
diversiﬁcation decisions. According to Getz and Carlsen (2000) more than two thirds of
participants reported that ‘To meet interesting people’ was found to be an important goal
in starting tourism and hospitality enterprises (mean of 3.96 on a ﬁve-point scale) among
Western Australian farmers. Certainly, this goal would be expected to be important
related to hospitality/tourism related diversiﬁcation enterprises. Interestingly though, said
study found that most participants (61.9%) reported that ‘To gain prestige by operating a
business’ was not an important goal in the diversiﬁcation decision-making process (mean
of 2.16). ‘To educate the consumer’ appeared as an important goal in the farm tourism
diversiﬁcation process in studies conducted in Montana (mean of 2.90 on a ﬁve-point

scale) and in Virginia (Nickerson et al., 1991 and McGehee and Kim, 2004 respectively).

62

There are also some goals associated with the characteristics of agripreneurs3 1.

Getz and Carlsen (2000) report that ‘To provide me with a challenge’, ‘To be my own
boss’ and ‘To become ﬁnancially independent’ were signiﬁcant start-up goals (means of
3.93, 3.94 and 3.97 respectively on a ﬁve-point scale). Interestingly, said study found
signiﬁcant differences in this type of goal regarding the farmer’s age and the business
structure: a) farmers younger than 44 years were more, likely to agree with the
independence factor than those over 65 years; b) sole proprietors were much more likely

to agree than married couples that being one’s own boss was an important start-up goal.

Getz and Carlsen (2000) also found that the lifestyle was by far the most
important goal factor (i.e., higher factor loadings) among Australian farmers offering
tourism and hospitality services. Furthermore, the start-up goals with higher means in
said study were ‘To live in the right environment’ and ‘To enjoy a good lifestyle’ with
means of 4.51 and 4.37 respectively on a ﬁve-point scale. Interestingly, this study found
out that younger farmers were more likely to agree with the lifestyle factor than those
over thirty-ﬁve years. Bowler et al., (1996) state that employment generation for a
family member was the fourth main goal behind the development of alternative
enterprises among English farmers. Providing employment for family members is
convenient when taking into consideration the beneﬁts of hiring family labor, such as low

labor wages, loyalty and commitment (Evans and Ilbery, 1989).

Table 2.2 summarizes the several start-up goals that have been tested for their

signiﬁcance in the farm diversiﬁcation decision-making processes.

 

3' Contrary to its misuse as synonymous of business owner or manager, the entrepreneur comprises a type
of behavior characterized as being proactive, taking initiative, identifying new opportunities and being
able to assume risks, characteristics that are found in those farmers that are able to make fundamental
changes to their existing farm such as the development of novel enterprises (Bryant, 1989).

63

Table 2.2 Summary of the several start-up goals tested behind
entrepreneurship and farm diversiﬁcation.

 

Types of Start-Up Goals

 

Economichinancial
To make lots of money
To maintain or increase the farm business income
To cope with ﬂuctuations in agriculture income (e.g., seasonality)
To reduce [agricultural] risk
To exploit an under-utilized farm resource
To safeguard farm investments (e.g., in infrastructure and breed selections)
To react to a need/opportunity in the market
To qualify for a state grant
To beneﬁt from a tax incentive
To offset the loss of a government agricultural program
To satisfy a few important customers
Tyrovide an Early] retirement income
Personal Aspirations
To support my/our leisure interests
Companionship with guests/users
To meet interesting people
Interest/hobby that grew into a business
To educate the consumer
Entrepreneurial Image
To be my own boss
To permit me to become ﬁnancially independent
To provide me with a challenge
To 33in prestige
Family Security
To create employment for a family member
To keep my family together
To keep this property in the family
To live in the right environment
To enjoy a_good lifestyle
Others
Need to create employment for a non-family member
lmitate others’ success

 

 

 

Existing Classifications of Farm Diversification Goals

Some scholars have attempted on more than one occasion to classify the most
relevant goals that drive farm diversiﬁcation decisions. McGehee and Kim (2004) used
Weber’s theory of formal and substantive rationality to distinguish three types of

motivations behind agri-tourism entrepreneurship in Virginia: formal (primarily

64

economic), formal-substantive (formal weighted) and substantive (primarily socio-

cultural) reasons.

According to their main motivations to start new business activities, Alsos et al.
(2003) identiﬁed three types of farm-based entrepreneurs. The Pluriactive, which is
mainly motivated to enable the farm continuance focusing on three goals: to sustain
farming, to expand the farm to incorporate more family jobs and increase income. The
Resources-Based farmer, oriented to better utilize their own -especially unique-
resources. And the Porfolio farmer whose main goal is the exploitation or development

of a new business idea.

Nickerson et al., 1991 used three sets of reasons (social, economic and externally
inﬂuenced) to classify entrepreneurs in three groups: The Economists, who are mostly
oriented toward economic reasons; the Inﬂuentials who mostly care about external
forces; and the Multidimensionals who have several types of reasons for diversifying

although are highly oriented to social goals.

In turn, Evans and Ilbery (1989) found two types of diversiﬁed farms based on the
economic/ﬁnancial goals pursued with diversiﬁcation: the Survivors who adopt
diversiﬁcation to remain on the land and generate family income, and the Accumulators

who aim to increase returns on surplus capital.

65

Attributes Associated with Farm Diversification Goals

Some studies have focused their attention on identifying farmer and farmer
attributes related to differences in the types of goals that are pursued”. For example,
Getz and Carlsen (2000) found that tour operators were less oriented toward making
money than hotel owners. McGehee and Kim (2004) showed that there are different
motivations among farm families based on characteristics of the farm household such as
acres owned (less than 100 acres vs. more than 300 acres), dependence on farming
operations (full-time farmers vs. farm hobbyists), and household income (those earning
less than $50,000 vs. those earning more than $100,000). Nickerson et al. (1991)
concluded that farmers and farmers/ranchers were more concerned about potential loss of
agricultural programs than ranchers and that smaller Operations (<100 acres) and farms
leasing less than 1000 acres were less concerned about agricultural income ﬂuctuations
while larger operations (>3000 acres) were less concerned about market and tax

incentives.

A number of studies failed to show statistical differences in the reasons why
farmers develop alternative enterprises on the farm, including the age of the ﬁrm, the
total business income (Lynn and Reinsch, 1990), the gender and the type of industry
(Kuratko et al., 1997). Current vs. potential entrepreneurs and number of years in
agriculture and offering recreation activities were also not statistically related to

diversiﬁcation goals (Nickerson et al., 1991).

 

32 Conversely, Nickerson et a1. (1991) found that those farms located in Eastern Montana were more
motivated by agricultural income ﬂuctuations and loss of government support while those in Western
Montana were more motivated by meeting a need in the market and tax incentives. However, such
differences were consistent with the fact that the Eastern Montana is more agricultural than Western
Montana.

66

Nickerson et al. (1991) found that some farm and farmer’s characteristics differ
among their three classes of entrepreneurs developed. For example, potential
entrepreneurs were more Multidimensionals (i.e., broad motivations driven) and
Inﬂuentials (i.e., external forces concerned) than current entrepreneurs and respondents
owning no land were higher Inﬂuentials while those with large land (>3 000) were more

Economists (oriented to economic reasons).

2.4 Previous Studies Assessing the Success of Farm Diversiﬁcation

The most suggested and tested beneﬁt of farm diversiﬁcation is the generation of
additional income for the farm household. However, assessments of income indicators
(e.g., revenues) from diversiﬁed enterprises are not conclusive regarding the economic
value of diversiﬁcation. On the one hand, farm diversiﬁcation appears a highly proﬁtable
enterprise. For example, Nilson (2002) reports that in Austria it is not unusual that
tourism has a share of 50% of the gross income of the farm, proving many farmers
depend on tourism to maintain their agriculture. On the other hand, several studies report
low revenues from diversiﬁcation. For example, Sharpley (2002) and Fleischer and
Pizarn (1997) report low revenues in most farm tourism businesses in Cyprus, Israel and
in England respectively; Ilbery (1991) stated that 60% of farmers interviewed reported
earning 10% or less of their income from diversiﬁcation and Hjalager (1996) concluded
that ﬁnancial returns of farm diversiﬁcation most often do not meet the expectations of

the farmers or the politicians.

More consistently, literature concludes that diversiﬁcation revenues allow farm

cash ﬂow. For example, Ventura and Milone (2000) prove that the vertical integration of

67

the farm in the food system through on-farm stores improve the ﬁnancial equilibrium of
the farm because of the continuous and stable sales throughout the year. Similarly,
McNally (2001) explains that the negative relationship found between expected income
and probability of observing a diversiﬁed activity (i.e., farmers expecting relatively low
proﬁts are more likely to diversify) indicates that revenues from diversiﬁed enterprises

provide a buffer in years of low agriculture returns.

Overall, although evidence shows that diversiﬁcation is not always as highly a
proﬁtable business as expected, it spreads agricultural risk and supplements farm income
enabling farms to remain in business and to engage in a variety of traditional agricultural
activities33 (Busby and Rendle, 2000; Ilbery et al., 1998; Fleischer and Pizarn, 1997;

Damianos and Skuras, 1996).

Several factors have been used to ascertain the dissimilar impacts of
diversiﬁcation on farm/ranch revenues". Discriminated analysis based on the types of
diversiﬁed activities yield some differences in the degree of ﬁnancial success of farm
diversiﬁcation. For example, Bowler et al. (1996) concluded that farm families that
adopted industrial and value-added enterprises were more proﬁtable than those farmers
adopting non-conventional crops and livestock. Likewise, it was found that diversiﬁed
operations represent a major component of total farm revenues on those farms offering

farm retailing (McNally, 2001), production and accommodation services (Ilbery, 1991).

 

3’3 Contrarily, McNally (2001) suggests that the insigniﬁcance of revenues from diversiﬁed enterprises,
even though the most important motivation is the increase of revenue, demonstrates the failure of the
diversiﬁcation strategy. This study rejects such conclusions because the achievement of other
entrepreneur goals also needs to be evaluated.

3’ Although not speciﬁcally referring to farm diversiﬁcation, Lynn and Reinsch (1990) found that owner
satisfaction and ﬁnancial performance were correlated with novelty of business lines‘and with the
operation’s length of existence. Furthermore, the authors found that diversiﬁcations undertaken to
reduce risk and to meet a need in the market were associated to short-term satisfaction, while pursuing
the satisfaction of important customers was related to long-term satisfaction.

68

Some farm internal attributes have been associated with different levels of
success. For example, Bowler et al. (1996) conclude that farmers with higher education
tend to obtain greater proﬁts from the diversiﬁed activities/services offered. In turn,
Hjalager (1996) concluded that those farms with higher [agricultural] margins are those
who earn greater revenues ﬁom diversiﬁcation. In addition, some farm external factors
such as market/large town closeness (McNally, 2001; Bowler et al., 1996), accessibility
through main roads and local “high landscape value” (McFarlane, 1997) also appear to be

associated with the success of farm diversiﬁcation.

Other economic values of diversiﬁcation analyzed are reviewed in the literature.
Murdoch and Miele (1999) concluded that business diversiﬁcation enables the capture of
additional markets while Fleischer and Pizam (1997) point out the value of maximizing
the use of the farm resources, enabling additional revenues without compromising them.
Interestingly, Lynn and Reinsch (1990) concluded that the ﬁnancial success of small
businesses sharing resources depends on the type of resource shared: sharing of products
is more associated with greater, especially short-term, ﬁnancial success than sharing

technology.

Evans and Ilbery (1992) point out the values associated with the interaction
between the farm and the external environment: capital mobilization, developing
knowledge of competitors, and marketing arrangements. Likewise, Ventura and Milone
(2000) concluded that the network created with on-farm direct sales gives ﬂexibility to

the ﬁrm to quickly adapt to the market changes.

Studies assessing the family security values agree regarding the beneﬁt of job

creation for household members. Hjalager (1996) suggests that farm diversiﬁcation in

69

Denmark allows for re-located farm household labor, providing jobs to the farmers’ wife
and to the older children. In turn, Ventura and Milone (2000) concluded that the
development of on-farm butcheries allow an optimal allocation of family labor because
most products (e.g., hams, salami) are processed during winter when there is little work
on the ﬁles. Furthermore, Ilbery et al. (1998) showed that 29% and 50% of the full and

part-time positions respectively related to farm diversiﬁcation involved family members.

As stated earlier, few studies have assessed the satisfaction of non-economic
goals. Getz and Carlsen (2000) concluded that the most recurrent satisfying factors in
rural tourism entrepreneurs were working as a family, the pride in the business, and the

business independence of the farm.

Disparities between the importance assigned to economic values in respect to
those potential non-economic values that diversiﬁcation can bring to farmers, suggest the

need to conduct a comprehensive assessment of the success of farm diversiﬁcation.

7O

CHAPTER III

RESEARCH METHODS

Chapter III is organized in four sections. The ﬁrst section presents the survey
methods used to collect the data for this study describing the special features,
conveniences, and the contents of the Web-based data-driven survey instrument. Section
two describes the methods used to identify the diversiﬁed farms and ranches throughout
Texas. The third section refers to the survey administration including the types and
timing of communications sent to participants and the methods used to monitor the data
collection. Section four presents the response rate and data preparation including the

methods used to exclude the cases that did not have the requisites for this study.

3.1 Web-based Data-Driven Texas Agriculture Diversiﬁcation Survey

The Texas Agriculture Diversiﬁcation Survey was designed as a Web-hosted
data-driven instrument. This survey medium was employed to: (1) increase the response
rate, (2) permit the survey to be duplicated in subsequent years and, (3) reduce the time
and costs of survey administration and data entry. These details are explained in the

following paragraphs.

The Convenience of an On—line Survey

Web-based —or virtual— surveys have numerous advantages compared to mail
surveys including: a) reduced costs (e.g., no printing, mailing, data entry), b) the time to

distribute, administer and prepare the data for analysis is shorter, c) the capacity to

71

efﬁciently target reminders and verify entries, d) reduces the cost and potential errors
associated with data entry and, e) the data collection data-base can easily be converted to

a Statistical Package for the Social Sciences (SPSS) analysis data-base.

Virtual surveys can be conducted through both email and web-based
instruments”. Literature shows that email surveys generate better response rates than
web-based surveys because they provide greater research control over the sample
(without being involved in the survey), avoiding multiple entries by the same person.
However, web-based instruments allow better displays, are more interactive and are
easier to complete than email surveys (Ilieva et al., 2002). Web-based surveys also

offer the capacity for data-driven surveys tailored to individual respondents.

Ilieva et al. (2002) recommended combining the beneﬁts of email and web-
based techniques to optimize the online data collection. That is, to establish contact with
the potential participants through a personalized email and posting the questionnaire on
the web. This study combined the beneﬁts of email contacts and correspondence with the
sample and a Web-based survey considering both suggestions. Farmers and ranchers
were initially, and then regularly, contacted throughout the survey process (i.e., survey
announcement and later reminders) by email. The Agriculture Diversiﬁcation Survey
was designed as a web-based instrument to allow a better display and a greater interaction

with the survey respondents.

Answers ﬁ'om participants were directly stored in a Microsoft ACCESS database

when participants click the “Submit” button. Both, the on-line instrument and the

 

35 Another [more recent] modality is the pop-up survey, in which a survey is displayed in a new browser
window when a person visits a certain website (Comley, 2000)

72

database were hosted in one of the servers of the Department of Community, Agriculture,

Recreation, and Resource Studies at Michigan State University.

The Advantages of a Data-driven Survey

HyperText Markup Language (HTML) and Active Server Pages (ASP) were
employed to design a data-driven survey. Data-driven surveys allow the application of
numerous dynamic features that are very useful for the participants and the survey
administrator. The dynamic features of this type of system are developed by retrieving
already stored information from the database. When a respondent completes and submits
questions comprising a section of the survey their response data is stored in the data-base.
When submitted the information, it is stored and can be retrieved and used to format
(e.g., what questions are asked various respondents) later sections in the database.
Respondents can also exit and re-enter the survey to recall and change responses already

provided.

The Agriculture Diversiﬁcation Survey’s data-driven system incorporated the
following features. First, it provided the capacity to tailor questions to the characteristics
of the responding farms/ranches. The system employs answers to questions previously
submitted to format (e.g., questions asked) subsequent sections. For example, responses
in Section V (Diversiﬁcation Goals and Objectives) are the basis to customize the
questions of Section VI (Assessment of the Accomplishment of Diversiﬁcation Goals).
Section V asks the respondent to select from a list of possible diversiﬁcation goals that
were important reasons behind their decision to diversify their farm. In the next section

they are only asked the degree to which they achieved the goals that they identiﬁed in

73

Section V. This capacity to customize the survey makes it more convenient for
respondents because they only encounter questions that are relevant to their farm and
ranch signiﬁcantly reducing the length of the survey. There is also a positive
psychological effect in that respondent’s are not distracted by questions that are

obviously not pertinent to them.

A second convenience of the Agriculture Diversiﬁcation Survey, especially given
its length and also that some questions requested information that respondents had to
research, is that respondents can complete the survey during multiple sessions. They can
begin the survey, enter and submit some answers, and then re-enter at a later time using
the e-mail and zip code they provided at the time of registration. This feature increases
the percentage of completed surveys because respondents are not constrained by having

to answer it all in one sitting. It also encourages greater accuracy of responses.

The data-driven survey also allows respondents to retrieve, review and change
previously submitted responses. This is a particularly useﬁrl feature for this survey
because it allows them to skip those questions that they needed to research (i.e., check
their production and sales records) and to re-enter and provide that information. This
feature allows respondents to review all the questions and develop a list of information

they need to obtain to provide accurate responses.

Possibly the most powerful and useful feature of the data-base driven feature is
that farmers and ranchers who responded to this (2005) survey will be able to recall their
answers in 2006 and adjust their responses to reﬂect changes in their operations such as

the development of a new enterprise or changes in their gross production. This provides

74

a unique way to allow farmers and ranchers to continue to enter information to represent

their current operations and report performance over time.

A fourth convenience of the survey is that the survey administrators are able to
continuously monitor the response and completion rate without manipulating the
database. An administrator webpage is available which displays the emails of the
respondent participants and the number of survey sections completed”. This allows the
survey administrators to (1) monitor the response rate and establish the best timing for
reminders and, (2) identify incomplete surveys and then send those respondents emails to

remind and encourage them to re-enter and complete unanswered sections.

Instrument Design

Two important features/capabilities of Web-based data-driven surveys were
employed in the design of Agriculture Diversiﬁcation instrument. First, the format (i.e.,
appearance) of the webpage was developed to create identiﬁcation with participants and
to facilitate responses. To create identiﬁcation with the participants, the survey combined
earthy colors (green, brown and beige) and displayed a header with six pictures
representing different types of agriculture diversiﬁcation. The questions were formatted
within a white background simulating a sheet of paper contrasting over a dark brown
background designed to make it easier for respondents to navigate the survey. For
example, to facilitate responses, multiple options questions were formatted in tables using

alternating colors for the rows to visually encourage responses.

 

’6 For protecting the conﬁdentiality of respondents, only the email address and the status condition (i.e.,
Section Completed) and not actual responses were shown in this webpage.

75

Second, the questions were grouped into eight different topic/subject sections,
each having its own “Submit” button. Sectioning had three primary advantages. This
system reduces the potential for “lost data” if an Internet session is some how interrupted
(e.g., power outage, server problem) because the response data from each section is
automatically stored in the database each time a respondent submits a section. Also, if
for whatever reason a respondent decides to stop completing the survey, the responses
already submitted are not lost. Finally, because re-entering respondents are provided
with a section index (See Appendix), they are able to go directly to any section that they

want to review, modify or complete without needing to review the entire survey.

The structure and ﬂow of the Texas Agriculture Diversiﬁcation Survey is shown
in Figure 3.1. The basis structure consists of (1) a home page (Appendix A), (2)
registration page (Appendix B), (3) login and section index pages (Appendices C and D)
and, (4) eight surveys sections (Appendix E).

Potential respondents accessed the survey, through a homepage
(http://www.prr.msu.edu/newagsurvey/). A direct link to this page was inserted into the
invitation e-mails and letters. The survey homepage includes a description of the
purposes of the study, identiﬁcation of the sponsors, instructions on registering and
completing the survey, links to conﬁdentiality information required by University
Committee on Research Involving Human Subjects (U CHRIS) at Michigan State

University, and various e-mail, mail and telephone contact information.

There are two primary links off the homepage, one to a Registration Page and

another to the Survey Login Page. First time visitors are instructed to register ﬁrst.

76

Respondents who had previously registered and/or completed sections of the survey were

referred to the login page.

 

 

@rvey HomepagE
(First-Time DA
Participants

 

 

(Registered
Participants

@egistratiorD (Login PageD

i

 

 

' l

l.
3

i
r

Section 1 '—

r

Section 2 33'—

.
based on answers ':.

in Section 2 ° t ASECtlon 4 _ 5 section
a ? Index

Section 5 .'.

 

Tailored sections . r" XSection 3 .3 r

.3.
l | . l

Tailored section .: .. 3
based on answers o e . . i? Section 6 p:

in Section 5 p, _
Section 7 .l—
Section 8 .‘—‘

ThankYou .

“ 7:- mantra-rm

is ;.
| | v

 

 

 

 

 

 

Figure 3.1. Flow Chart of the Agriculture Diversiﬁcation Survey

The registration page collects basic contact information such as the email address,
zip code and ﬁrll name of the owner/operator. Respondents are ﬁrst required to provide a
valid e-mail address and the zip code where the farm/ranch is located. Their email
address and zip code were designed as the key to re-access the survey. After completing
and submitting the registration page information participants are automatically

transferred to the ﬁrst section of the survey. An error message is displayed if they fail to

77

provide the zip code and or email address because they would not be able to re-enter the
survey and it would be impossible to contact them (e.g., reminders, provide respondents
the report).

Once registered, participants were able to re-enter and access their responses to
the survey through the login page. Once they log in, a “Sections Index” page appears
that displays a table indicating those sections of the survey that they have completed and
ones that remain to be completed. They could access any of the section ﬁ‘om the Index
page to complete, review or modify their responses. Because the survey is database
driven, Sections 111 and IV are only accessible if respondents ﬁrst complete Section II

and Section V is only accessible if Section V1 is answered ﬁrst.

The ﬁrst section of the survey, consisting of thirteen questions, gathers general
information about the characteristics of the farm or ranch enterprise, including farm size,
location, organization attributes and the way the respondents got into farming and
ranching. A combination of questions gathers data concerning the family attachment of
the family to the farm/ranch such as the number of generations that the farm has been in
the family and whether the next generation will likely to continue to farm and ranch. It
also gathers information regarding farming and ranching practices and stewardship
methods used at the farm as well as the preservation, restoration and adaptive re-use of
heritage/cultural objects. Section I contains one question intended to verify whether a
respondent’s farm or ranch is actually a working farm or ranch (i.e., raises or produces

agriculture products for commercial sale).

Section II inquires about the products, services and enterprises that generate

farm/ranch revenues. The types of products/revenues include: Crops, Livestock, Other

78

Agriculture Products and Services; Processing of Foods and Beverages; Recreation,
Tourism and Special Events; Lodging and Accommodations; Restaurants and Food
Services; Health and Cosmetics; Arts and Crafts; Educational Activities; Leasing,

Easements and Time Shares; and Other Products and Services.

Section III deals more in depth with the speciﬁc products and services offered by
the agricultural enterprise. For each general product/service category (e. g., Recreation,
Tourism and Special Events) respondents are asked about speciﬁc products and services
(e.g., tours, wildlife observation, rides, ﬁshing, etc.). Section III questions are
tailored/developed based on responses they provide in Section II. Section III also gathers
information about the sequence in which they developed different revenue generating
enterprises. Table 3.1 shows the product/service categories comprised in Section II and

the number of products and services for each production category (Section III).

Table 3.1 Number of response categories by types of agricultural product/services

 

 

 

categories.

Number of Response Categories

ProductIService Categories Fixed Open Ended
Crops 21 2
Livestock 14 2
Other Agriculture Products and Services 16 2
Processing of Foods and Beverages 22 2
Recreation, Tourism and Special Events 21 2
Lodging and Accommodations 6 2
Restaurants and Food Services 7 2
Health and Cosmetics 4 2
Arts and Crafts 11 2
Educational Activities 7 2
Leasing 4 2
Easements 5 2
Time Shares - 1
Other Products and Services - 3

 

79

Section IV of the survey focuses on farm/ranch sales and different revenues.
This includes the total gross value of all sales. Information is also collected on percent of
revenues coming from different product categories and enterprises. Again the product
and enterprise categories are only the ones they indicated in Section II. The last Section
III question asks participants to assess the proﬁtability, breaking even or loss of their

diversiﬁed operations.

Sections V and VI of the survey deal speciﬁcally with initial goals or objectives
for diversifying (e. g., products and enterprises) the farm or ranch. Section V asks about
twenty ﬁxed possible goals/objectives for diversiﬁcation. In Section VI they are asked
the relative importance and degree of accomplishment of the goals and objectives they
identify in Section V. Section VI also asks about measures of diversiﬁcation
achievements and contribution such as whether there was a change in the levels of proﬁts
and debts of the ﬁrm as a consequence of the diversiﬁcation process. Finally, two
questions deal with the farmers or ranchers assessment of the success/failure of the
diversiﬁcation including whether they would still, based on their experience, make the

decision to diversify again.

Section VII compiles information regarding the ﬁnances, marketing and
management practices of the responding farm or ranch. Speciﬁcally there are questions
relating to sources of start-up, marketing methods, and membership in business related
associations. There are also questions relating to the enterprise business decision-maker,
whether the ﬁrm has business and marketing plans, and sources of information that were
useful in the diversiﬁcation process. This section also asks about their future

development of diversiﬁed enterprises.

80

The last section (VIII) consists of ten questions about characteristics of the
farm/ranch owner/operator and their households including socio-economic characteristics

and sources of income, including on and off the farm/ranch employment.

Revision and Pre-Test

Based on the literature review, study objectives and hypothesis, and questions
offered by the Texas Department of Agriculture and Natural Resource Conservation
Service, a “paper draft” survey was developed and distributed for review to persons from
the Texas Department of Agriculture (TDA), the Natural Resources Conservation Service
(NRCS) and faculty at Michigan State University (MSU). Based on the reviews that

were received the survey content was modiﬁed.

The Web-based survey was tested numerous times to verify the correctness of the
variable coding and to make sure that all possible answers for each variable were
properly sent to the database. Thereafter, people from TDA, NRCS and MSU tested the
survey many different times to detect problems in the operation of the survey design,
taking special care to assess the proper operation of the data-driven features. Any
problems were corrected and then the survey was ﬁeld tested on a random sample of 108
farmers and ranchers in the US. included in the database previously developed. This test
focused on the ability for farmers and ranchers to provide the data that was requested,
whether they were able to successfully navigate the Web-based Survey and the extent to

which they completed all the questions.

81

3.2 Identifying Diversiﬁed Farms and Ranches in Texas

Identifying diversiﬁed farms and ranches in Texas was for sure the most
challenging phase in this project. The number and identity of diversiﬁed farms was not
known (see p. 18). Neither the US. Department of Agriculture (USDA) nor the Texas
Department of Agriculture (TDA) had a previous list that identiﬁed diversiﬁed farms and
ranches in the state. Although agricultural related organizations (e.g., Texas Emu
Association and National Christmas Tree Association) have members lists, their members
are not necessarily diversiﬁed, and in fact many are rather specialized in terms of
production. In addition, those listings mostly do not discriminate between the
agricultural producer (i.e., farm/ranch) and other types of members (e.g., manufacturers,
ﬁnancial institutions, advertising agencies).

Hence a database of Texan diversiﬁed agricultural ﬁrms had to be developed from
scratch. Two different sources were used as starting points to develop the list. First, a
systematic search on the Internet produced the larger number of diversiﬁed farms and
ranches. The search on the Internet focused on identifying the e-mails and other contact
information of farms and ranches that were raising various agriculture products for
commercial sale and that have developed at least one diversiﬁed enterprise according to
the categories comprised in the Agriculture Diversiﬁcation Model (see pp. 15-19) 37.

This search process included: (1) use of key words (e. g., vacation-ranch, organic-farm)
with general and specialized Web search engines (e.g., Yahoo, Google, Agrisurf), and (2)

searches of the Web sites of various farm and ranch organizations. This search process

 

37 This search was a component of a project sponsored by the Grazing Land Technology Institute of the
Natural Resources Conservation Service (NRCS). The main purpose of the project was the identiﬁcation
of a wide spectrum of diversiﬁed farms and ranches for extension purposes throughout the United States
(Mahoney and Barbieri, unpublished).

82

resulted in the identiﬁcation of four hundred ninety-seven (497) farms and ranches with
diversiﬁed operations in Texas. The Texas Center for Rural Entrepreneurship provided
the contact information for another one hundred forty-one (141) diversiﬁed ﬁrms.
However, many of these email addresses were found to be either incorrect or not valid
and were undeliverable. It is possible, although undeterminable, that the businesses with

these emails were no longer in business.

The identiﬁcation process resulted in a database that comprised six hundred
thirty-eight (638) diversiﬁed farms and ranches. The email addresses of ﬁve hundred
sixty—eight (568) operations were obtained and the mailing addresses of another seventy
(70). In addition, the farm/ranch name, website URL address, mailing address, phone
and fax numbers and name of a contact person (e. g., owner, manager) were also collected
when available. This database was later sent to the TDA and the Natural Resources
Conservation Service (N RCS) for review. They were unable to add signiﬁcantly to this

list. This developed database became the ﬁrst major product of this project.

This list of diversiﬁed farms and ranches served as a purposive or judgmental
sampling, deﬁned as a sample that researchers draw because it best serves the purposes of
the study (Monette et al., 1994). Since the population of diversiﬁed farms/ranches in
Texas is not known or available, probability sampling (i.e., random selection) could not

be accomplished”.

The diversiﬁed farmers and ranchers that were identiﬁed and sent an email asking

them to participate in the survey were encouraged to forward the email to other

 

38 Similarly, Getz and Carslen (2000) reported using a non-random sample to study family rural

businesses in tourism and hospitality in Western Australia due to the lack of an adequate database.

83

diversiﬁed farms and ranches to recruit them to participate. This resulted in the

recruitment of an additional forty-nine (49) farms and ranches.

3.3 Survey Administration

The Texas Agriculture Diversiﬁcation Survey was launched in spring 2005.
According to McGehee and Kim (2004), spring is a good season to conduct surveys to
farmers because most farmers can be reached at home. An e-mail was sent to ﬁve
hundred sixty-eight (568) farms and ranches to invite them to participate in the survey. In
addition, an invitation letter was sent to ﬁve hundred eight-nine (589) participants
through US. mail”. Both the e-mail and the letter sent through the US. mail explained
the purpose of the study, described the conﬁdentiality procedures, contained the contact
information of the project coordinators, and provided a link and the URL address to the
web instrument. In addition, the e-mail contained a link to an electronic letter from
Susan Combs, Texas Commissioner of Agriculture, supporting this study. The mailed
letter included a copy of her support letter. The survey did not offer any economic
incentive to participants. However, participants were offered a free copy of the study

report.

Because the identiﬁcation of diversiﬁed farms and ranches continued even after
the ﬁrst invitation letters and email were sent, the survey was conducted —invitations and
reminders -in three waves. The timing of the invitations and reminders for the three

waves is shown in Table 3.2.

 

39 The number of the e-mailed invitations (568) does not coincide with the mailed invitations (589) or the

total number of identiﬁed farms/ranches (638) because it was not possible to ﬁnd the complete contact
information (either e-mail or postal address) of some identiﬁed farms/ranches.

84

 

 

 

Table 3.2 Dates of communications sent to participants by types of communication
and waves.
. Dates Sent
Types of Communication Wave 1 Wave 2 Wave 3
Electronic Communications (n=424) (n=88) (n=56)

Invitation E-mail
First Reminder
Second Reminder
Third Reminder

Fourth Reminder - Last Call

Fifth Reminder - Please 3 More!

May 24‘“, 2005
May 31“, 2005
June 07‘“, 2005
June 23'“, 2005
July 12‘“, 2005
July 20‘“, 2005

May 31“, 2005
June 06‘“, 2005
June 13‘“, 2005
June 23'“, 2005
July 12‘“, 2005
July 20‘“, 2005

June 06‘“, 2005
June 13‘“, 2005
June 20‘“, 2005
June 23'“, 2005
July 12‘", 2005
July 20‘", 2005

 

Regular Mail Communications

Invitation Letter
Reminder

(n=483)
May 26‘“, 2005
June 20‘", 2005

(n=65)
June 08‘“, 2005
June 20'“, 2005

(n=41 )
June 08‘“, 2005
June 20‘“, 2005

Five email reminders and one mail reminder were sent to non-respondents (Table

3.2). The reminders contained a repeat brief explanation of the study, the contact

information of the project coordinators and the link to the survey homepage. The

intervals between reminders were determined based on when the percentage of responses

tailed off signiﬁcantly“). Figure 3.2 depicts how reminder e-mails for Wave 1 (in red)

were scheduled after signiﬁcant decrease in the rate of responses (in blue).

 

Thnhg and Effect of Electronic Remhders Sent - Group A

 

 

 

 

 

 

 

 

 

 

 

 

A _
3:1] - tamer
§,/\/\ /\
alU\]\ A.
if ’ Y \ /V\ /\
£,ﬁ,,,,_,..e,_,ﬁ’,,\,/

 

 

DIV!

 

Figure 3.2. Timing and Effect of Electronic Reminders for Wave A

 

’0 The pace of the responses was constantly monitored through an administrator webpage as previous
explained (see p. 73).

85

Different means of communicating with respondents (were employed including e-
mail, regular mailing, phone and fax. Inquires and requests from participants were
usually responded to within 24 hours. These inquires included such things as how to re-
access the survey and requesting veriﬁcation genuineness of the proj cot/institution and
the conﬁdentiality procedures. Two participants requested to complete the survey
through a telephone interview and two others mailed and faxed hard copies of the survey
they completed on line because they were unable to submit their responses due to

problems related to settings in their computers.

The completeness of surveys that were submitted was carefully monitored on a
continuing basis. Thank You emails were continuously sent to participants who
submitted completed surveys. Respondents who ﬁrst submitted partially completed
surveys were sent emails reminding them of survey sections that were still not complete
along with the instructions to re-access and complete the survey. A maximum of three
personalized reminder e-mails were sent to each respondent who submitted partially
completed surveys. As a last resource, those who failed to complete their surveys even

after receiving three reminder emails were contacted by telephone.

To protect the conﬁdentiality of the respondents as well as to protect the
information gathered, back-ups of the database were created daily. These backed-up
databases were stored on a different server. Access to all survey databases was restricted

to the survey administrators.

The survey was closed on July 27th, 2005 at midnight Eastern Standard Time.
According to the literature, on-line surveys are usually conducted in less than a month,

although some can be extended up to two months (Ilieva et al., 2002). Since spring is a

86

very busy season for farmers, and further since some respondents were completing the
survey after they received a fourth reminder, the survey remained open for sixty-four

days.

3.4 Response Rate and Data Preparation

Of the ﬁve hundred sixty-eight (568) e-mails for diversiﬁed farms and ranches
that were initially identiﬁed, ninety were determined to be undeliverable. Most were
associated with non-existent or suspended accounts. Only three e-mails (0.5%) did not
reach the recipients because they were spam blocked. There were four hundred seventy
(470) valid deliverable e-mails (Table 3.3). One hundred two (102) of the ﬁve hundred
eighty-nine (589) mailed invitation letters were returned as undeliverable because of

address errors, the recipient had moved, or the business had closed.

Table 3.3 Number of useable e-mails.

 

Total E-mails Undelivered E-malls Valid E-mails

 

Wave 1 424 59 361
Wave 2 88 22 63
Wave 3 56 9 46
Total 568 90 470

 

The ﬁnal response rate for the Agriculture Diversiﬁcation Survey was 231

(3 8.9%)“. This is a much higher response rate than is normally expected in virtual

 

4' The response rate does not include the 49 responses obtained from the snowball sampling technique.

87

surveys42 and a much higher response rate than expected given the length of the survey.

It is also higher than many mail and telephone surveys.

The initial invitation e-mails produced a response rate close to ﬁfteen percent.
The ﬁrst email reminder increased the response rate to almost 20%. The second and
fourth reminders only increased the response rate 4%. However, the third reminder
generated a signiﬁcant increase in the response rate of about 10%. The ﬁnal reminder

sent to participants resulted in 6% more responses.

The snowball sampling technique resulted in completed surveys form forty-nine
farmers and ranchers not on the initial list. However, only farmers and ranchers
comprising the initial sampling frame that was developed are included in the calculation

of the response rate.

Table 3.4 Response rate by type of electronic communication.

 

 

 

 

Types of Number of Response Rat;T Response Rate?
Electronic Communication Respondents (E-Mail) (Legular Mall)
From Original Listing
Invitation E-mail 65 13.8% 13.3%
Reminder 1 91 19.4% 18.7%
Reminder 2 103 21.9% 21 .1 %
Reminder 3 147 31 .3% 30.2%
Reminder 4: “Last Call” 155 33.0% 31 .8%
Reminder 5: “Please, 3 more!” 183 38.9% 37.6%
From Snowball Effect
Number of Respondents 49
. Total Number of Respondents
Total Number of Respondents 232

 

3' Response rate = completed surveys / valid e-mails (470)
2 Response rate = completed surveys / valid mailed letters (487)

 

’2 According to Comley (2000), response rates in virtual surveys mostly range between 15%-29% with a
mean of 24%.

88

The survey data that was collected and stored in the nine separate ACCESS
database tables was exported so that it could be analyzed using SPSS software. The e-
mail address provided by the respondents as part of the registration was the primary key
to link the nine data tables. After the nine tables of data were combined into one SPSS
ﬁle, the e-mail address was replaced with an ID number. The contact information (e-mail
address, respondent name and farm/ranch name) was removed to protect the

conﬁdentiality of the participants.

The data was ﬁrst examined to determine the extent to which the respondents
satisﬁed three conditions. First, they had to be a farm or ranch according to the USDA
deﬁnition (see p. 31). This condition was evaluated using information from three
questions: whether the farm/ranch raises agriculture products for commercial sale, the
existence of types of agriculture products (i.e., crops, livestock, or other agriculture
products/ services) and the total gross value of sales in 2004 (over $1,000). The second
condition was that the participating farm/ranch must have developed at least one
diversiﬁed enterprise including agriculture diversiﬁcation (i.e., non-conventional crops,
livestock or practices). The Production Proﬁle of the farms and ranches along with the
listing of farm/ranch products and services were used to evaluate this condition. Finally,
the farm/ranch must have been located in Texas. This information was gathered as part of

the registration.

The screening resulted in two hundred sixteen (216) that met all three conditions.
Table 3.5 shows that ﬁfteen cases failed to meet all three requirements. Eight
participants did not meet the USDA’s traditional deﬁnition of being a farm/ranch: F our

cases did not produce/raise any crops, livestock or other agricultural products, including a

89

City Park, a wildlife refuge and lands completely devoted to conservation easements; and
another four cases had no agriculture gross income. Five participants were excluded
because were located outside Texas. Two respondents were excluded because they were

not diversiﬁed farms and ranches.

Table 3.5 Number of useable and excluded cases by reasons for exclusion.

 

Number of Cases

 

Number of Respondents
Total Number of Respondents 231
Cases Excluded
No agriculture production
2004 income less than $1000
Non Texas farms/ranches
Non diversiﬁed farms/ranches
Number of Useable Cases
Total Number of Useable Cases 216

 

Nab-b

 

The method used to develop the sample ﬂame has some limitations since it may
not be representing the overall characteristics of diversiﬁed farms and ranches. First, the
sample used may be over-representing diversiﬁed farms and ranchers involved in
recreation/tourism and direct marketing because they are more prone to have a web
presence. Second, it may be under-representing diversiﬁed farms and ranchers that are
small and have a high percentage of loyal local clientele because they are less likely to be
engaged in web-based marketing. It is also possible that may not be representing
diversiﬁed farms and ranches that only or primarily market on the web their predominant
product (e. g. cattle) and not other enterprises they may have been engaged in. Therefore,
it is questionable whether the sample used is representative of the population of

diversiﬁed farms and ranches in Texas.

90

CHAPTER IV

AN OVERVIEW OF

AGRICULTURE DIV ERSIFICATION IN TEXAS

This chapter presents the characteristics of Texas diversiﬁed farms/ranches and
their operators. These characteristics will be the basis for the segmentation analyses and
proﬁles that will be presented in Chapter V. This chapter also further validates the
agriculture diversiﬁcation model, including detailed descriptions of the types and extent
of diversiﬁcation categories and enterprise-lines that farmers and ranchers are

implementing. This chapter also veriﬁes the dynamic nature of diversiﬁcation.

4.1 Profile of the Texas Diversiﬁed Farmers and Ranchers

Demographic characteristics, the level of attachment of the family to the farm, the
farmer’s family life-cycle, the role of the farmer’s spouse and the farmer’s experience are
the topics used to describe the farmers and ranchers that have diversiﬁed their operations

in Texas.

Socio-economic Proﬁle

The study reveals that the diversiﬁcation agripreneurs that responded to the
survey are younger on average than Texas farmers in general (Table 4.1). Only 17% of

the participants are 65 years old or older compared to 31% of all Texas farmers and

91

ranchers. The majority of the Texas agripreneurs (64.5%) that participated in this study

are middle-age adults (45-64 years).

Table 4.1 Socio-economic characteristics of Texas diversiﬁed farmers and
ranchers compared to all Texas farmers and ranchers demographics.

 

 

 

 

 

 

Percent of Percent of All TX
Attributes Survey Respondents FarmsIRanches'

FarmerlRancher’s Age °

Less than 25 years 0.5 0.9

25—34 years 3.0 4.5

35-44 years 15.0 14.7

45-54 years 26.0 24.7

55-64 years 38.5 24.3

65-69 years 7.0 10.3

70 years or more 10.0 20.7
Operator’s Gender °

Male 70.1 88.1

Female 29.9 11.9
Farmer/Rancher’s RaceIEthnicity 5

White 92.0 89.1

Black/African American 0.5 2.5

Hispanic/Latino 3.5 7.0

Mixed 2.0 0.4

Other 2.0 1.0
FarmerIRancher’s Level of Education ”

Elementary 0.5 n/a

Attended high school 0.5

Completed high school 10.3

Attended college 22.6

Completed college 33.2

Attended graduate school 6.7

Completed graduate school 26.2
Annual Farm Household income "

Less than $25,000 7.6 n/a

$25,000 - $34,999 10.3

$35,000 - $49,999 14.1

$50,000 - $74,999 18.9

$75,000 - $99,999 15.1

$100,000 - $149,999 16.8

$150,000 - $199,999 5.4

More than $200,000 11.9

 

3 According to US. Census of Agriculture 2002
b These were the pro-established survey response categories.

92

Analyses of the survey data conﬁrm previous studies concerning the active role of
women in agriculture diversiﬁcation (Bock, 2004; McNally, 2001; Ilbery et al., 1992).
Over a fourth (29.9%) of the diversiﬁed farms and ranches that responded to the survey
has female principal operators. The percentage of female principal operators of
diversiﬁed farms is more than twice than all farms in Texas (11.9%). However, this may

not represent the gender distribution of all diversiﬁed farms in Texas.

Not surprisingly most diversiﬁed farmers are white (920%)”. Interestingly,
percentages of diversiﬁed farmers/ranchers that are Black/African American (0.5%) and
Hispanic/Latino (3.5%) are smaller than the overall Texas percentages (2.5% and 7.0%
respectively). However, this is very likely due to the fact that these farmers and ranchers
are less likely to have access to the Web and were therefore less likely to be included in
the survey. Agripreneurs have advanced education. Two-thirds of the respondents have
at least one college degree and the majority (88.7%) has at least some college education.

Over one-third of diversiﬁed farm households had a yearly income over $100,000“.

Diversiﬁed Farm and Ranch Attachment to Farming

Diversiﬁed farmers’ families exhibit a strong attachment to farming and desire to
pass on the farm/ranch and agricultural traditions (Table 4.2). Twenty-nine percent of
respondents reported having inherited” the farm or the farmland and 38.5% reported
being at least the second- operating this farm/ranch. A very high percentage (70.7%)

had intentions of passing the farm to the next generation. Interestingly, more second

 

’3 The 2002 Census of Agriculture also shows that the majority of farmers and ranchers of Texas are white.

4’ The annual farm household income included income coming from the farm, wages, salaries, social
security and retirement beneﬁts.

’5 Inherit includes those that although not formally inherited, are already working their parents’ farm/ranch.

93

generation-farmers (92.0%) have intentions of passing on the farm than ﬁrst generation
farmers (59.5%). This suggests that either attachment to the farm grows over time, or that

more ﬁrst generation farmers view the farm as a business rather than a heritage.

Table 4.2 “Level of Attachment ” of Texas diversiﬁed farmers and ranchers families to
their farms and ranches.

 

 

 

 

 

 

 

Family Attachment to the Farm Percent of Respondents
Ways the farmer got the farm
Purchased land and started the farm/ranch 50.0
Purchased an existing farm 18.2
Inherited the land and started the farm/ranch 4.7
Inherited an existing farm 24.3
Other 2.8
Number of Generations on the Family
One generation 61.5
Two generations 9.5
Three generations 10.0
Four or more generations 19.0
Succession Expectations
Expecting to pass the farm to next generation 70.7
First generation farmers 59.5
Second or more generation farmers 92.0
Not expecting) pass the farm to next'generation 29.3
Total Number of Family Members Working on the Farm 3
None 18.8
1 family worker 16.1
2 family workers 34.3
3 — 5 family workers 24.0
6 or more family workers 6.8
Mean (2.34)
Operator’s Principal Occupation
Farming/ranching 61.2
Non farming/ranching 38.8
Off-Farm Work Days Yearly (n=200)i
None 56.5
At least one day 43.5 °
1-49 days 7.0
50-99 days 9.3
100-199 29.1
200 days or more 54.6

 

‘ Categories constructed based on the natural distribution of the continuous data.

" Categories developed according to US. Census of Agriculture 2002

“ According to US. Census of Agriculture 2002, 56.1% of Texas farmers worked at least one
day off the farm. Of those, 10.3% worked 1-49 days off-farm; 5.8% between 50-99 days;
12.7% between 100-199 days and 71.2% worked at least 200 days off-farm.

94

The survey results also indicate that diversiﬁed farm family members seem to be
more actively involved in farming and ranching activities. Almost two-thirds (65.1%) of
diversiﬁed farms and ranches have at least two family members working on the farm
(mean = 2.3). In addition, 61.2% of the operators reported that farming was their main
occupation and 56.6% reported working exclusively on the farm. This is a considerably
greater involvement than for all Texas farms (53.6% and 43.9% respectively). Only
23.6% of those that worked off the farm worked 200 or more days off the farm, which is

much lower than the 40% reported in the 2002 Census of Agriculture.

Diversiﬁed Farm Family Characteristics

Not unexpectedly, most (87%) diversiﬁed farmers and ranchers are married
(Table 4.3). Diversiﬁed farmers are more likely to reside on the farm (75.5%) than
Texas farmers in general (67.3%). F arnilies living on the farms average three persons
(mean=2.83). Interestingly, less than a third of respondents (31%) who live on-farm
have their children living with them. Only 22.5% live on-farm with young children.
The relatively large percentage of empty nester diversiﬁed farm households is consistent
with the fact that almost half of the diversiﬁed farmers (42.7%) are retired from a
previous job and almost two thirds (64.5%) are between 45 and 64 years old as

previously presented (see table 4.1).

95

Table 4.3 Characteristics of diversiﬁed Texas farm/ranch families.

 

 

 

 

 

 

Farmer’s Family Attributes Percent of Respondents

Marital Status (n=200)

Married farmers 87.0

Sichle farmers 13.0
Farmer Residence (n=200)

Farmers living on the farm 75.5

Farmers not living on the farm 24.5
On-Farm Household Composition (n=129)

Farmers living on-farm with spouse or signiﬁcant other 87.6

Farmers living on-farm with children 31.0

Farmers living on-farm with children under 20 years old 22.5

Farmers living on-farm with children 20 years old or over 29.5
On-Farm Household Size (n=129)

1 person 0.8

2 persons 62.7

3 - 4 persons 23.3

5 persons or more 13.2

Mean (in number of persons) (2.83)
Range (min. — max) (1 — 7)

Operators Retired from Previous Job (n=199)

Retired farmers 42.7

Non-retired farmers 57.3

 

Role of Spouses in Diversiﬁed Farm Operations

Most diversiﬁed farmers (91.4%) have working spouses or signiﬁcant others
(Table 4.4). The majority (84.3%) of the spouses work on the farm/ranch, either
exclusively (51.2%) or simultaneously working off-farm (33.1%). Almost half of the
spouses (47.6%) working on-farm perform activities related to agriculture matters and the
management and marketing of their diversiﬁed enterprises. Almost a quarter of them are
exclusively dedicated to farming or ranching (26.7%) or to diversiﬁed operations
(25.7%). Of those spouses working off-farm (i.e., pluriactive), almost two thirds

(68.0%) worked 200 or more days off the farm.

96

Table 4.4 Activities that diversiﬁed farmer/rancher’s spouses perform and the
amount off farm/ranch work days.

 

 

 

 

 

Farmer’s Spouse Attributes Percent of Respondents

Employment Status of Significant Other (n=174)

Non-working spouses 8.6

Workingspouses 91 .4
Employment Location of Farmers’ Spouses ‘ (n=121)

Work exclusively on-farm 51.2

Work exclusively off-farm 15.7

Work on and off farm 33.1
Types of Activities of Farmers’ Spouses Performed On-Farm " (n=105)

Exclusively farming/ranching 26.7

Exclusively diversified enterprise(s) 25.7

Farming/ranching and diversiﬁed enterprise(s) 47.6
Number of Days Worked Off-Farm of Farmers’ Spouses ° " (n=75)

1-49 days 9.3

50-99 days 6.7

100-149 days 12.0

1 50-1 99 days 4.0

200 or more 68.0

 

‘5 Only include the 91.4% of working spouses

” Only include only the 84.3% of spouses that work on-farm

° Only include only the 48.8% of spouses that work off-farm

" Categories developed according to US. Census of Agriculture 2002 usage.

Extent of Farming Experience

Diversiﬁed farmers and ranchers are experienced; having an average of 14.5 years
of experience in farming and 9.5 years involved with farm diversiﬁcation enterprises
(Table 4.5). More than half of the participants had more than ten years in farming
(52.5%) and more than ﬁve years in as diversiﬁed agripreneurs (57.9%). Over a quarter
(27.4%) of the agripreneurs have agriculture background and almost a third (31.0%) has
business training. Interestingly, the majority of the respondents (51.5%) have educational

background in disciplines not related to agriculture or business.

97

Table 4.5 Extent of farming/ranching and diversiﬁcation experiences of
diversiﬁed farmers and ranchers and their educational

 

 

 

 

background.
Farmers’ Experience Indicators Percent of Respondents

Years in Farming (n=200)

Less than 3 years 7.0

3 - 5 years 12.5

6 — 10 years 28.0

11 - 20 years 27.0

21 — 30 years 18.0

More than 30 years 7.5

Mean (in years) (14.5)

Years as a Diversiﬁed Farmer (n=180)

Less than 3 years 17.8

3 - 5 years 23.9

6 - 10 years 24.4

11 — 20 years 24.4

21 - 30 years 7.2

More than 30 years 2.3

Mean (in years) (9.5)

Education Background (n=171)

Agriculture 1 7.5

Business 21.1

Agriculture and business 9.9

Other 51.5

 

4.2 Characteristics of the Diversiﬁed Farms and Ranches.

The following tables proﬁle diversiﬁed farms and ranches on farm size, farm

location, farm organizational structure and marketing and managerial sophistication.

Farm Size

Various studies have used different size variables to characterize farms and

ranches (Sumner and Wolf, 2002). This study collected data on three different size

98

indicators including: 1) numbers of acres owned and operated“; 2) acreage farmed
including owned and rented farmland; and 3) gross farm sales, including the revenues

from all diversiﬁed enterprises“.

Table 4.6 presents seven size categories of farms“. Almost a third (32.5%) of
farms responding to the survey are small farms (less than 50 acres), 39.6% are medium
size farms (50 - 999 acres) and 27.9% are large farms (1000 +acres). Interestingly,
diversiﬁed farms tend to be larger than average Texas farms and ranches. While the
majority of farms in Texas (57.5%) are medium sized and a small percentage (9.8%) are
small, a greater proportion of diversiﬁed farms are medium (39.6%) and large farms

(27.9%). Almost half of the respondents (44.7%) farm less than 50 acres.

Diversiﬁed farms and ranches have higher gross sales on average than Texas
farms overall, suggesting a positive revenue impact associated with diversiﬁcation. For
example, while more than half (58.7%) of farms in the US. sold less than $5,000 of farm
products annually (USDA: NASS, 2004a), only 12.6% diversiﬁers had farm income of
this amount. Conversely, more than half (50.5%) of the diversiﬁed farms reported
agriculture related total gross sales of US$50,000+, compared to just 10.2% of all Texas
farms and ranches. Almost twice the percentage of diversiﬁed farms and ranches
(29.6%) has revenues between $10,000 and $49,999 compared to overall Texas farms

(18.3%).

 

’6 According to the USDA deﬁnition, the acreage operated included the la acres owned minus the acres
rented or assigned to a tenant (USDA, 2001b).

’7 The Texas Agriculture Diversiﬁcation Survey also gathered information about the number of acres
farmed under a grazing permit on a per-head as an additional farm descriptor. There were too few cases
(2%) to report any distribution.

’8 Although structured as a continuous variable in the survey instrument, the land size and acres farmed
distributions were grouped into seven size groups to enable a comparison with the general Texas
farmland size distribution reported by the USDA.

99

Table 4.6

The size, and gross sales revenues of diversiﬁed farms and ranches and all
Texas farms and ranches.

 

 

 

 

. TX Diversiﬁed Farms TX Farms/Ranches
Farm Size Indlcators (Peres—lit) (Percent) .
FamuRanch Acres " (n=210)
0 0.9 Na
1 - 9 7.0 6.0
10 - 49 24.6 26.7
50 - 179 24.2 30.8
180 - 499 9.8 18.6
500 - 999 5.6 8.1
1000 - 1999 10.2 5.3
2000+ 17.7 4.6
Mean (in acres) (2,975) (570)°
Land Farmed (in acres) (n=215)
Less than 1 4.2 Na
1 - 9 15.8
10 - 49 24.7
50 - 179 17.2
180 - 499 6.5
500 - 999 5.6
1000 - 1999 9.3
2000+ 16.7
Mean (in acres) (2,963)
Farm Gross Sales in Dollars (n=192)
Less than 2,500 6.3 44.6
2,500 - 4,999 6.3 14.1
5,000 - 9,999 7.3 12.8
10,000 - 24,999 16.1 12.5
25,000 - 49,999 13.5 5.8
50,000 - 99,999 14.1 3.8
100,000 - 499,999 25.5 4.9
500,000 or more 10.9 1.5

 

3 According to US. Census of Agriculture 2002.

b Categories constructed from the continuous data gathered to match the Agriculture Census
categories.

° Statistics for 2003 (USDA-NASS, US and State Level Data, 2004).

On average, Texas diversiﬁed farm and ranches employed ten (10.4) employees
in 2004, although more than half of the farms and ranches (51%) had less than 6
employees. More than a third (34.8%) of employees were ﬁrll-time year round, 13.3%

were part-time year round, 24.8% full-time seasonal and 27.1% were part-time seasonal

100

employees. Table 4.7 shows the labor distribution of employees of the diversiﬁed farms

among the four employment categories.

Table 4.7 Number and types of employees on Texas diversiﬁed farms and ranches.

 

 

 

Year-Round Seasonal
""m“;:;,i’;,"'°’°°‘ Full Time Part Time Full Time Part Time (183:)
134.8%) 93.3%) (24.8) (27.1%)
Less than 3 71.7% 84.3% 87.5% 70.3% 24.0%
3 - 5 employees 16.2% 9.4% 5.2% 10.9% 27.0%
6 - 10 employees 5.2% 4.2% 3.7% 13.0% 24.5%
11 - 20 employees 1.6% 1.6% 2.1% 3.7% 14.6%
More than 20 employees 5.3% 0.5% 1.5% 2.1% 9.9%
Mean 3 (3.64) (1.39) QSQL (2.82) (10.43)

 

Farm Location

The distances of diversiﬁed farms/ranches from a paved highway, an urban
cluster49 and the nearest urbanized area50 provide indicators of accessibility (Table 4.8).
Almost two thirds (65.2%) of the diversiﬁed farms/ranches are located less than one mile
away ﬁom a paved highway revealing the importance of accessibility to automobiles. A
high percentage is also located close to urbanized areas beneﬁting simultaneously from a
large base of customers and rural landscapes. While very few diversiﬁed farms/ranches
are located in urban clusters (6.3%) or urbanized areas (2.4%), a high percent (83%) are
located less than 30 miles from an urban cluster and less than 60 miles (60.2%) away

from urbanized areas.

 

’9 An urban cluster is a densely settled area that has a census population of 2,500 to 49,999 (US. Census
Bureau, 2000)

so An urbanized area is a densely settled area that has a census population of at least 50,000 (US. Census
Bureau, 2000)

101

Table 4.8 Distances diversiﬁed farms and ranches are located from a paved
highway, urban clusters and urbanized areas.

 

 

 

 

Distance indicators Percent of Respondents
Distance from a Paved Highway (in miles) (n=210)
Over a paved highway 31.9
Less than 1 mile 33.3
1 - 2 miles 16.7
3 - 4 miles 8.1
5 - 9 miles 7.6
10 miles or more 2.4
Distance from an Urban Cluster ' (in miles) (n=206)
Located in an Urban Cluster 6.3
Less than 5 miles 18.0
6 - 10 miles 26.2
11 - 30 miles 38.8
31 - 60 miles 7.8
61 - 90 miles 2.4
91 miles or more 0.5
Distance from an Urbanized Area 3 (in miles) (n=209)
Located in an Urbanized Area 2.5
Less than 5 miles 4.3
6 - 10 miles 5.7
11 - 30 miles 23.4
31 - 60 miles 36.8
61 - 90 miles 16.3
91 - 120 miles 3.8
121 - 180 miles 3.8
181 miles or more 3.4

 

a Densely settled area that has a census population of 2,500 to 49,999
b Densely settled area that has a census population of at least 50,000

Agriculture Production and Practices

About the same proportion of diversiﬁed farms and ranches raise crops (58%) and
livestock (63 %). Only a quarter (24.9%) produce other agricultural products. Table 4.9
shows the types of commodities and products grown/raised by production line (i.e., crops,
livestock, and other agricultural production). As might be expected, cattle are the
commodity most commonly raised by Texas diversiﬁed farms and ranches (42.3%) since

cattle are the number one agriculture product (65.8%) in this State.

102

Table 4.9 Commonly raised/grown agriculture products by Texas diversiﬁed farms

 

 

 

 

 

and ranches.
Agriculture Production Line TX Diversiﬁed Farms/Ranches
(n=21?” Within Production Line (°/.) Overall (%)

Crops (n=125) 58.7

Hay or haylage 28.8 ' 16.9 '

Christmas trees 24.0 14.1

Veggtables or melon ﬁeld grown 23.2 13.6
Livestock (n=135) 62.9

Cattle 66.7 42.3

Horse, ponies or other equines 34.8 22.1

Deer or elk 25.2 16.0
Other Agricultural Products (n=48) 24.9

Eggs 33.3 7.5

Honey and apiary products 14.6 3.3

Wool and ﬁbers 12.5 2.8

 

a This is the percentage of farms and ranches that produce this commodity among those that
have this production line. For example, 28.8% of the farms and ranches that grow crops
are producing hay or haylage.

b This is the percentage of all the respondents that raise/grow this commodity. For example,
16.9% of all survey respondents produce hay or haylage.

An expected but still interesting ﬁnding is that environment-ﬁiendly farming and
stewardship practices, including biological control, protection or propagation of native
plants, and improvement of wildlife and ﬁsheries habitats, are commonly practiced by
diversiﬁed farms and ranches. About three quarters (78.3%) of diversiﬁed farms are
engaged in at least one environment-friendly agriculture practice and almost all (90.2%)
are involved in some type of resource stewardship practice (Table 4.10). On average,
diversiﬁed farms and ranches are engaged in more than one (1.5) environment-ﬁiendly
agriculture practices and more than three (3.1) stewardship practices. These results imply
the importance that diversiﬁed farm and ranch customers place on environmentally
ﬁiendly farming. Stewardship and environmentally ﬁiendly farming practices also
contribute to creating environments and landscapes that support AgriTourism, events and

on-farm retailing experiences.

103

Table 4.10 Environment-ﬁiendly and stewardship farming/ranching
practices on diversiﬁed farms and ranches.

 

Types of Practices Percent of Respondents

 

Environment-Friendly Farming Practices (n=207)
Do not practice any 21.7

 

 

Practice at least one Q;
Tyggs of Practices
Organic/natural growing/raising 46.3 '
integrated Pest Management 37.0
Farm/ranch waste management 31.5
Crop rotation 30.9
No additives 29.0
Biological control 22.8
Certiﬁed organic 6.2
Other 9.3
N_umber of Environment-Friendly Farming Practices
Range (min. — max.) (0 — 7)
Mean 1.5
Median 1.0
Stewardship Practices
Do not practice any 9.8
Practice at least one M
Typgs of Practices
Water conservation 83.4 ”
Soil conservation 79.3
Wildlife habitat improvement 62.7
Native plants propagation/protection 60.1
Fisheries habitat improvement 17.6
Other 7.2
Number of Stewardship Practices
Range (min. - max.) (0 - 6)
Mean 3.1
Median . 3.0

 

a This is the percentage of farms and ranches that utilize this speciﬁc practice among
those that practice at least one environment-friendly practice. For example, 46.3%
of the 78.3% farms and ranches that employ environment-friendly practices are
doing organic or natural agriculture.

" This is the percentage of farms and ranches that utilize this speciﬁc practice among
those that practice at least one stewardship practice. For example, 83.4% of the
90.2% farms and ranches that employ environment-friendly practices are doing
water conservation.

104

Farm Organizational Structure

More than half (62.4%) of diversiﬁed farms and ranches are individual or family
proprietorships51 (Table 4.10). Diversiﬁed farms are more likely to be organized as
partnerships (14.1%) or corporations (21.2%) compared to the general Texas farms
according to the USDA 2002 Census of Agriculture (5.6% and 1.9% respectively). These
results are possibly associated with the need for strategic alliances to broaden the
farmer’s skills required for the development and management of the diversiﬁed

enterprises. They may also be a risk management strategy.

In two-thirds of the diversiﬁed farms and ranches the decision-makers in both
agricultural (68.2%) and business (67.9%) matters are the owners/managers. In more
than a quarter, the decision maker is either the farmer and their spouse or the fanrr
household for agricultural (25.1%) and business issues (29%). Three quarters of all

diversiﬁed farmers and ranchers farm the land that they own (72.6%).

Marketing and Managerial Structure

Whether the farm has a written business plan and a marketing plan, whether the
farmer/rancher belonged to any business associations, and the types of distribution
channels (i.e., markets) and marketing methods that the farm/ranch utilizes to distribute
or promote its products and services were indicators of their marketing and managerial

structure and sophistication.

 

5' This percentage is much lower than the 90.2% of total individual or family proprietorships farms in
Texas according to the 2002 census of agriculture.

105

Table 4.11 Organization structure, decision-maker and tenure structure of
diversiﬁed farms and ranches in Texas.

 

 

 

 

 

 

 

Farm/Ranch Organization Structure Percent of Respondents
Farm/Ranch Organization Structure (n= 213) 1 ,
Individual or family (sole proprietorship) 62.4
Partnership 14.1
Corporation (including LLC) 21.2
Other 2.3
Decision-Maker
Ln Agriculture Matters (n=195)
Owner/manager 68.2
Manager other than owner 6.7
Farmer and spouse 13.3
Farmer household 11.8
Other 0.0
In Business Matters (n=190)
Owner/manager 67.9
Manager other than owner 2.6
Farmer and spouse 15.3
Farmer household 13.7
Other 0.5
Tenure Structure of the Land Farmed (n=215)
Only farmed own land 72.6
Mostly farmed own land 2 9.3
Evenly farmed own and rented land 3 5.1
Mostly farmed others land ‘ 5.6
Only farmed rented land 7.4

 

According to US. Census of Agriculture 2002, 91.9% of Texas farms and ranches
are individual or family organized, 5.6% are partnerships, 1,9% are incorporated and
0.7% have other types of organization including cooperatives, estate or trust and
institutional.

At least 60% of the land farmed was owned

The ratio between farmed rented owned at rented was within 40/60

At least 60% of the land farmed was rented

More than half of farms and ranches (52.2%) have either a written business or
marketing plan (Table 4.12). Of these, a very high percentage (50.5%) has both. Over
two thirds (77.8%) are members of at least one business association. They use a wide
range of marketing methods to distribute and promote their diversiﬁed products to
customers. On average respondents use more than four (4.4) marketing methods. This

was expected because diversiﬁed farms and ranches have more diverse customers and

106

they must engage in various types of farm/ranch-to-customer direct marketing; wholesale
marketing is not enough. Since specialized markets require distinct marketing strategies
and approaches it was expected that they would be more sophisticated in terms of the
types of marketing they practice. Not surprisingly, given the initial sampling frame (see
page 81), the majority of participants (89.6%) use Webpage to market their products and
services. More than half of participants reported using printed materials, such as

brochures (56.0%) and ads in media, such as newspapers and radio (55.5%).

Table 4.12 Availability of business/marketing plans, association membership and
marketing methods employed by Texas diversiﬁed farms and ranches.

 

 

 

 

 

Marketing and Managerial Attributes Percent of Respondents
Availability of a Business and Marketing Plan (n=201)
Do not have business or marketing plans 47.8
Have either a business or marketing plan 52.2
Only have a business plan 9.5 a
Only have a marketing plan 40.0
Have both business and marketingplans 50.5
Association Membership (n=198)
Members of at least one association 77.8
Not a member of any association 22.2
Marketing Methods (n=191)
Web page 80.6
Printed materials 56.0
Ads in media 55.5
Listings in specialized directories 45.0
Trade shows and special events 41.9
Through an association 37.2
Direct mail to current and potential customers 36.1
Customer newsletters 19.9
Direct shipping of products 18.8
Sales promotions 16.2
Special labeling 9.4
Customer loyalty clubs 3.7
Product subscriptions 2.1
Other 12.6
Number of methods used
Range (min. — max.) (1 — 11)
Mean (4.4)

 

’ This is the percentage of farms and ranches that have either a business or a marketing plan.

107

Diversiﬁed farmers and ranchers in Texas also employ a range of different
product distribution channels. About a third (36.9%) wholesale their products and this
accounts for an average of 61 .0% of their total sales (Table 4.13). The primary
distribution channels used by diversiﬁed farmers and ranchers are the direct sales to
customers (61.5%), sales through intemet and/or virtual market (41.0%), and the sales on
"on farm/ranch" markets (38.5%), with an average sales of 55.5%, 37.3%, and 55.0%

respectively.

Table 4.13 Types of product distribution channels employed by Texas diversiﬁed
farmers and ranchers.

 

Percent of Respondents Percent of Revenues

 

Types of Distribution Channels (n=195) (Mean) a
Wholesale sales of products 36.9 61.0%
Direct sales to customers 61.5 55.5%
intemet and/or virtual market 41.0 37.3%
”On farm/ranch” market 38.5 55.0%
”Off farm/ranch" retail stores from others 10.8 . 34.6%
Farmers' market 9.7 21.1%
Direct sales to resorts and restaurants 3.6 nla °
Own ”Off farm/ranch" retail stores 2.6 n/a
”Off farm/ranch" non-store locations 1.5 nla
Other direct distribution channels 11.8 43.1%

 

' This is the average revenues generated from this distribution method for those farms and

ranches that use this method to distribute/sell their products.
" None or too few cases to report

4.3 Validation of the Conceptual Model of Agriculture Diversiﬁcation

The data collected on the Texas Farm and Ranch Diversiﬁcation Survey validates
the diversiﬁcation model and its various components that was presented and discussed in
Chapter 1. First, Texas farmers and ranchers are diversifying their revenues by

incorporating eight different diversiﬁcation enterprises and activities: (1) value(s)-added

108

processing and packaging; (2) non-traditional crops, livestock and practices; (3) new
marketing and distribution methods; (4) recreation, tourism and hospitality; (5) historic
preservation and adaptive re-use; (6) leases, easements and timeshares; (7) contracts and
services; and (8) expertise, consulting and education. Second, agripreneurs are
strategically developing and leveraging compatible and supportive enterprise-lines within
these eight diversiﬁcation categories. Finally, diversiﬁcation appears to be a dynamic
process and appears to stimulate and support additional diversiﬁcation. The next
paragraphs present the results regarding the agriculture diversiﬁcation model previously

proposed.

The Agriculture Diversiﬁcation Model

The results of the survey reveal that over a third (34.4%) of farmers and ranchers
are engaged in some type of value(s)-added processing, producing products such as food
and beverages, arts and crafts and cosmetics and health products (Table 4.14). Over
two-thirds (68.9%) of diversiﬁed farmers and ranchers generate revenues through Non-
Traditional Crops, Livestock and Practices. As expected, the majority (88.2%) of the
diversiﬁed farmers and ranchers practice at least one type of new marketing - marketing
communications, distribution - often a form of direct or relationship marketing. Although
this includes creative or niche wholesaling, most are engaged in various types of direct
marketing. Again, these ﬁndings are not surprising because of the initial sample ﬁame

used”. However, high quality and specialized products, including recreation and tourism

 

52 Availability of website was excluded when calculating the distribution of the enterprise
categories to prevent a bias due to the selection of the study sample. The inclusion of
this product increases the “New Marketing and Distribution” category to 88.3%.

109

experiences, cannot effectively be wholesale marketed or distributed and require more
creative and non-traditional marketing. About two thirds (64.6%) of participants reported

having diversiﬁed through AgriTourism, recreation and/or hospitality services.

Table 4.14 Categories of On-farm/ranch diversiﬁcation, diversiﬁcation index
categories, and extent of diversiﬁcation segments.

 

 

 

 

Diversiﬁcation Categories, Index and Extent Respondents (n=212)
Diversiﬁcation Categories
Value-Added to Existing Products 34.4%
Non-Traditional Crops, Livestock and Practices 68.9%
New Marketing and Distribution 88.2%
Recreation, Tourism and Hospitality 64.6%
Historic Preservation and Adaptive Re-use 42.9%
Leases, Easements and Timeshares 13.2%
Contracts and Services 6.1%
Education, Expertise and Consulting 31.1%
Diversification index (1 -8) '
Range (1-8)
Mean Index Score 3.5
Median Index Score 3.0
Extent of Diversiﬁcation Segments
Lightly Diversiﬁed (1 - 2 enterprises) 28.6%
Moderately Diversiﬁed (3 - 4 enterprises) 44.1%
Highly Diversiﬁed (5 - 8 enterprises) 27.2%

 

This index represents the sum/composite of the eight types of diversiﬁcation categories
that the Agriculture Diversiﬁcation Model comprises.

The ﬁndings reveal that almost half (42.9%) of the diversiﬁed farmers and
ranchers have preserved, restored and/or adaptively re—used historic buildings, equipment,
artifacts and other heritage on their farm/ranch. A smaller but still large proportion
(13.2%) is generating revenues through various types of leases (e.g., recreation,
buildings) as well as positive and negative easements. Almost a third (31.1%) offer at

least one consulting or education service. Contracting and services such as boarding

llO

horses, renting pack animals and customized harvesting or processing generate revenues

for about 6% of the diversiﬁed farms and ranches.

Almost three quarters (71.3%) of farmers and ranchers that completed the survey
are involved in three or more categories of diversiﬁcation. The average is 3.5 categories.
They were classiﬁed - lightly, moderately and highly diversiﬁed - based on the number
(1-8) of diversiﬁcation categories they are involved with. Over a quarter (28.6%) are
engaged in just one or two categories of diversiﬁcation and they are referred to as lightly
diversiﬁed farms and ranches, about half (44.1%) are moderately diversiﬁed meaning that
they are involved in either three or four categories of diversiﬁcation enterprises, and
another quarter (27.2%) are highly diversiﬁed in that they are engaged in ﬁve or more

enterprise categories.

Based on the literature which has been reviewed, it was hypothesized that there is
a relationship between various characteristics of the farms/ranches and their operators
and the extent to which they are diversiﬁed. It is important to recognize that just
because a relationship exists it does not infer cause or effect. In other words, farmers and
ranchers with greater resources may become more diversiﬁed because they already had
more resources available, or farmers who are diversiﬁed may be more able, or been
required (e.g., buildings, staff) to secure additional resources. Also some farmers have
difﬁculty identifying and measuring inherent characteristics and tendencies that would
make them successful traditional or diversiﬁed farmers. There also may be combinations
of situational characteristics that produce greater likelihood of diversiﬁed or traditional

farming success.

11]

When it comes to farm/ranch characteristics there is a signiﬁcant relationship
between the extent of diversiﬁcation and gross farm sales and also the number of total
number of employees. On average, farms and ranches that are more diversiﬁed have
signiﬁcantly higher gross farm sales (12:18.0, p=.006) whereas lightly diversiﬁed farms
employ signiﬁcantly less employees (x2=31.5, p<.001) as shown in Table 4.15. There is
no statistically signiﬁcant relationship between the extent of diversiﬁcation - lightly,
moderately, highly - and size of farms or the number of acres farmed or ranched. Highly
diversiﬁed farms are more likely to have a business plan than moderately diversiﬁed
farms (12:66, p=.010). Interestingly, the extent of diversiﬁcation is not related to
whether they have a marketing plan. This may in part be due to ambiguity in terms of
what constitutes a marketing plan and the great variability in what is considered to be a

marketing plan.

The more highly diversiﬁed a farm or ranch the more likely it is to be engaged in
various types of resource stewardship including soil and water conservation, protection or
propagation of native plants, and improvement of wildlife and ﬁsheries habitats. A
summative stewardship index comprised of 13 types of stewardship (l= implemented,
0= not implemented) and environmentally ﬁiendly agriculture practices was ﬁrst
calculated and then compared across the different diversiﬁcation segments. Highly
diversiﬁed farms are engaged in an average of six (5.8) environmentally ﬁiendly
practices, while moderately diversiﬁed average ﬁve (4.8) practices and lightly diversiﬁed
average three (3.4) practices (F =1 6.3, p<.001). Tukey Post-hoe tests show signiﬁcant
differences across the three groups indicating a positive relationship between extent of

diversiﬁcation and propensity to engage in stewardship. Of course there is the potential

112

that farmers and ranchers who diversify have an unrelated propensity to undertake
stewardship practices. However, the nature of many diversiﬁcation enterprises along

with the characteristics of the market strongly suggests a contributory association.

Table 4.15 A comparison of operating characteristics and stewardship practices of light,
moderately and highly diversiﬁed farmers and ranchers.

 

Lightly Moderately Highly
Diversiﬁed Diversiﬁed Diversiﬁed Sig.
(28.6%) (44.1%) (27.2%)

Total Gross Value of Sales 1|(n=201)

 

Less than $50,000 61.4% 60.9% 33.3% x’=18.0, p=.006'
$50,000 - $99,999 12.3% 12.6% 15.8%
$100,000 - $499,999 12.3% 20.7% 38.6%
$500,000 or more 14.0% 5.8% 12.3%
. Total Number of Employees " (n=188)
No employees 10.9% 0.0% 0.0% x’=31.5, p<.001“
1 - 2 employees 32.6% 19.8% 14.3%
3 - 5 employees 21.7% 36.0% 17.9%
6 - 10 employees 19.6% 19.8% 33.9%
11 - 20 employees 8.7% 14.0% 21.4%
21 or more employees 6.5% 10.5% 12.5%

 

Firm Management Sophistication (n=198) ...
Availability of written businesgrlan 28.3% 25.0% 45.6% [=72 p=.027

 

Environment-Friendly and Stewardship Practices Index (n=213) °

 

 

index (mean) 3.4 4.8 5.8 F=16.3, p<.001
Sales Channels (n=66) °

Percent of wholesale product sales

(mean) 81.6% 58.4% 37.9% F=11.1, p<.001

Percent of direct market sales

(mean) 18.4% 41 .6% 62.1%
Marketing Methods index (n=189) "

index (mean) 2.9 4.3 5.7 F=16.3, p<.001

 

This includes all 2004 gross farm/ranch sales derived from all existing enterprises.

This includes full time and part-time year-round and seasonal employees employed in 2004.
This index represents the sum/composite of thirteen stewardship and environmentally friendly
agriculture practices that farms and ranches are performing.

This indicates the percent of revenues derived from wholesale and direct sales.

Painivise comparisons show that the highly diversiﬁed segment is different from the lightly
diversiﬁed (x2=12.8 p=.005) and from the moderately diversiﬁed segments of=11.2 p=.011).
Two-way chi-squares show that the lightly diversiﬁed segment is different from the highly
diversiﬁed (x2=15.5 p=.009) and from the moderately diversiﬁed segments 08:14.6 p=.012).
Chi-squares tests performed between groups show that signiﬁcant differences occur between
the highly and moderately diversiﬁed segments 08:66 p<.010).

113

The percentage of wholesale and direct farm sales and the number of marketing
methods employed is signiﬁcantly associated with the extent of diversiﬁcation (p<.001).
As would be expected, the more diversiﬁed the farm, the smaller the percentage of
wholesale product sales, and the number of marketing methods employed is greater.
These results were expected because, as previously mentioned, one of the purposes of
agriculture diversiﬁcation is the broadening of farms/ranches’ markets requiring different
marketing methods. Diversiﬁed farmers and ranchers are more likely to develop
products for and market to a broader range of specialized or niche markets (e. g.,
AgriTourists, organic consumers) and this requires more creative marketing methods and
media (Murdoch and Miele, 1999). Diversiﬁed farmers are also likely to be engaged in
more types of marketing because AgriTourism and other services require a different

approach than agricultural products.

The association between agripreneur characteristics and the extent to which they
have diversiﬁed their sources of revenues was also tested. There was no association
between operator age, gender, education level or primary occupation (i.e., farming or
non-farming) of the principal operator and the extent of farm/ranch diversiﬁcation. Nor
was any signiﬁcant association between farm household attributes -- household income,
spouse’s main occupation (i.e., on-farrn work or off-farm work), and whether the operator
is a new entrant to farming and ranching or has a longer farming involvement (2+

generations) -- and the extent of farm/ranch diversiﬁcation.

114

Enterprise-lines

Exploratory research conducted prior to and in preparation of this survey
indicated that some farmers and ranchers are developing compatible enterprise-lines
within the eight categories of diversiﬁcation (see pp. 22-23). Enterprise-lines are related
farm and ranch enterprises that complement and leverage one another (e.g., cross
marketing, adding different values), take greater advantage of expertise and facilities that
are available, together create critical mass, and overall broaden market appeal. For
example, offering several related recreational activities and hospitality services can help a
farm to become a destination attraction worthy of a trip, return trip or extended trips to
the countryside. Also adding various recreational events can be an effective marketing
medium to attract market segments that will purchase other farm products. A broader
combination of different farm and ranch products and services can also help increase

market awareness and positioning.

Diversiﬁed farmers and ranchers were asked about whether or not they offered
speciﬁc enterprises including 45 types of value-added processes, 19 non-traditional
crops, livestock and practices; 16 types of marketing; 33 enterprises related to recreation,
tourism and hospitality; 4 types of historic preservation and adaptive re-use; 10 types of
leases, easements and timeshares; and 5 enterprises related to education, expertise and
consulting. Table 4.16 presents the number of different diversiﬁcation categories and the
number of enterprises that farmers and ranchers are offering. This provides two related

indicators of the breadth of farm and ranch diversiﬁcation.

115

Table 4.16 Different measures of the extent of farm and ranch diversiﬁcation.

 

 

 

 

Indexes
Range‘I 03:31? Mean Median
(Min.—Max.) (mufﬁn) Score‘ Scored
Diversiﬁcation Categories
1 . Value-Added to Existing Products (1 -45) (1 -18) 3.5 2.0
2. Non-Traditional Crops, Livestock & Practices (1 -1 9) (1 -7) 2.1 2.0
3. New Marketing and Distribution (1 -16) (1 -1 1) 4.1 4.0
4. Recreation, Tourism and Hospitality (1 -33) (1 -1 8) 4.7 4.0
5. Historic Preservation and Adaptive Re-use (1-4) (1-3) 1.6 1.0
6. Leases, Easements and Timeshares (1 -1 0) (1 -3) 1 .3 1 .0
7. Contracts and Services - - - -
8. Education, Expertise and ConsultirLL (1-5) 41-4) 1.9 2.0
Diversiﬁcation Breadth
Diversiﬁcation Categories (1 -8) (1 -8) 3.5 3.0
Enterprise-Lines (1 -32) (1 -46) 10.5 9.0

 

° This is the maximum number of enterprises identiﬁed within a diversiﬁcation category.

b This was the observed range of enterprises offered by participants. The most diversiﬁed
participants engaged in Value-added diversiﬁcation have developed 18 different enterprises.
This is the mean of the number of enterprises in each diversiﬁcation category. For example,
farmers and ranchers that are engaged in value-added diversiﬁcation are engaged in an
average of 3.5 enterprises.

Half the farmers that are engaged in value- added diversiﬁcation are engaged in 2 or more
value-added enterprises.

More than half of the diversiﬁed farms and ranches are engaged in nine or more
different enterprises. The average is 10 (10.5) enterprises. The ﬁndings reveal that a
majority of the farmers and ranchers that initially decide to diversify continue to add
related enterprises in response to market demand and because the expertise (e.g.,
marketing, processing) that they develop is applicable across related products comprising
different enterprise-lines. Often adding an additional enterprise is needed to provide
customers/visitors with a more complete package. The results also reveal that a
signiﬁcant amount of farm diversiﬁcation involves farmers and ranchers expanding
enterprise-lines within the eight different diversiﬁcation categories. For example, farms

that have diversiﬁed though A griTourism are offering thirty-three different types of

116

recreation and entertainment experiences including u-pick activities (e.g., berries
harvest), recreational activities (e. g., hayrides), various types of recreational lodging (e.g.,

Bed and Breakfast) and on-farm dining.

A very common form of diversiﬁcation involves diversiﬁcation through new
marketing and distribution channels. Not surprisingly, given the initial sampling frame,
the majority of participants (72.6%) are using the Internet for marketing purposes. The
majority (56.6%) of Texas diversiﬁers also direct sell to their customers. A large
proportion of the diversiﬁed farmers who responded to the survey is engaged in organic
or natural farming (35.4%) and also offers recreational tours on their farms and ranches.
Interestingly, over a quarter of the Texas agripreneurs (27.8%) are preserving historic
and cultural buildings on their farms, such as barns, mills and farmhouses. Table 4.17
displays the number of enterprise-lines in each diversiﬁcation category and the three
most frequent enterprise-lines per category, providing the percentage of occurrence

within category and within overall respondents.

117

Table 4.17 Diversiﬁed categories and diversiﬁed enterprise-lines on Texas diversiﬁed
farms and ranches.

 

 

 

 

 

 

 

 

 

Within
Diversiﬁcation Categories (n=212) R::rr):ldteonlts lCategory P233212
ercent
Value-Added Processes (n=74) 34.4
Jams, jellies and preserves 19.2 6.6
Ceramics and pottery 36.4 5.7
Dried ﬂowers 36.4 5.7
Photography 36.4 5.7
Christmas ornaments (e.g., wreathsL 36.4 5.7
Non-Traditional Crops, Livestock 8. Practices (n=146) 68.9
Organic/natural growing/raising 51.4 35.4
No—additives farming 32.2 22.2
Biological control 25.3 17.5
Deer or elk 23.3 16.0
New Marketing and Distribution (n=187) 88.2
Availability of website 81.9 d 72.6
Direct sales to customers 63.8 56.6
Sales through lntemet (i.e., Virtual Markets) 42.6 37.7
Participation in trade shows and special events 42.6 37.7
Recreation, Tourism and Hospitality (n=137) 64.6
Tours 56.0 35.4
Pick/cut your own (e.g., berries, Christmas trees) 32.1 20.3
Paid hunting and customized hunting tours 32.1 20.3
Wildlife observation 29.9 18.9
Historic Preservation and Adaptive Re-use (n=91) 42.9
Preservation of buildings 69.4 27.8
Preservation of equipment 54.1 21.7
Preservation of artifacts 28.2 11.3
Other 7.1 2.8
Leases, Easements and Timeshares (n=28) 13.2
Leasing of land ‘ 69.2 8.5
Conservation Easements 15.4 1.9
Leasing of equipment 11.5 1.4
Leasing of animals 11.5 1.4
Hunting leases 11.5 1.4
Contracts and Services (n=13) e 6.1
Expertise, Consulting and Education (n=64) 13.1
Educational tours 84.4 25.5
Classes, workshops and seminars 57.8 17.5
Apprenticeships programs 17.2 5.2
Horse m lessons 14.1 4.2

 

This is the percent of overall respondents who are engaged in each diversiﬁcation category.
Indicates the percentage of farms/ranches engaged in this category of diversiﬁcation that offer
this enterprise. For example, 19.2% of the farms and ranches engaged in Value-Added to
Existing Products Diversiﬁcation are processing jams, jellies and preserves.

Indicates the percentage of all farms/ranches that responded to the survey that are engaged in
this enterprise. E.g., 6.6% of all respondents are processing jams, jellies and preserves.
Availability of website was excluded when calculating the distribution of the enterprises
categories to prevent a bias due to the selection of the study sample. The inclusion of this
product increases the “New Marketing and Distribution” category to 88.3%.

No speciﬁc enterprise-lines within this diversiﬁcation category were identiﬁed.

118

Dynamic Diversiﬁcation

The results from this survey also conﬁrm the belief that diversiﬁcation is a
dynamic process and that diversiﬁcation stimulates and supports additional
diversiﬁcation. In other words, diversiﬁcation encourages even greater diversiﬁcation
for reasons including that a majority of diversiﬁed farmers and ranchers are realizing
important beneﬁts from diversiﬁcation (Mahoney et al., 2006). Also, many appear to be
incorporating new enterprises as a means of adjusting to and capitalizing on changing
market expectations and competitive situations. To test these assumptions, diversiﬁed
farmers and ranchers were asked questions about the pace and timing of their

diversiﬁcation and whether or not they plan to continue to add new enterprises.

Table 4.18 Pace and timing of development of diversiﬁed enterprises.

 

 

 

Diversiﬁcation Development Reggarsgegts
Pace of Development (n=193)
All enterprises developed at once 30.1
Enterprises developed in phases 69.9
Started farm with livestock and crops 98.1 a
Did not start farm with livestock and crgs 1.9
Timing of Diversiﬁcation Development (n=179)
Started as a diversiﬁed farm 24.5
1 - 2 years 25.0
3 — 5 years 18.4
6 - 10 years 14.5
11 - 20 years 12.3
More than 20 years 5.3
Mean (in years) (5.4)

 

" This is the percent from the 69.9% that diversiﬁed in phases.

Over two thirds (69.9%) of the respondents phased in various diversiﬁcation
enterprises over time (Table 4.18). As would be expected, the majority of them (98.1%)

started their business growing crops or raising livestock. On average, Texas agripreneurs

119

began to diversify after ﬁve (5.4) years of starting farming. Only a quarter of the
diversiﬁed farmers (24.5%) began their operations as a diversiﬁed farm or ranch, and
another quarter (25.0%) began their diversiﬁcation less than two years after starting their
farms and ranches. A small percentage of agripreneurs (17.6%) diversiﬁed after ten

years of being in farming.

Table 4.19 Percentage of farmers and ranchers planning additional diversiﬁcation
and the categories of diversiﬁcation they are expecting to incorporate.

 

Percentage of Time Frame

 

 

Resppndents (Mean) "
Farmers Planning to Diversify (n=190)
Planning to diversify more 48.9
Nowanning to diversilmore 51.1
Types of Additional Diversiﬁed Enterprises ” (n=78)
Recreation, tourism and special events 55.1 1.8
Educational activities 34.6 1.8
Lodging and accommodations 30.8 2.4
Processing of foods and beverages 16.7 1.6
Restaurants and food services 15.4 1.8
Arts and crafts 12.8 1.6
Other products and services 12.8 1.4
Health and cosmetics n/a ‘ -
Easements n/a -
Leasing nla —
Time-shares nla —

 

" 1 = within one year; 2 = 2-3 years; 3 = 3-4 years; 4 = 5 years or more.
b Includes only those farmers and ranchers that plan to further diversify (48.9%).
c Too few cases to report.

Almost half (48.9%) of the diversiﬁed farms and ranches planned to further
diversify by adding new enterprises (Table 4.19). The most frequent types of enterprises
that farmers expect to add in the future are recreation, tourism and special events
(55.1%), educational activities (34.6%) and lodging and accommodations (30.8%). A

large number are planning to diversify relatively soon. With the exception of those

120

planning to add or expand lodging and accommodations to their farms and ranches, most
who are planning to further diversify expect to do so in three years or less. A relatively
high percentage (12.8%) anticipate diversifying additionally in three years or less by
adding enterprises not currently included in the diversiﬁcation model. Clearly farmers
are considering a broader range of enterprises as a means of generating additional income

to sustain family farms.

Operator characteristics were examined to determine which, if any, are associated
with plans to diversify additionally. No signiﬁcant associations were found between
intentions to ﬁrrther diversify and the age, gender and level of education of the principal
operator, the number of generations the operator’s family has been engaged in farming,

or whether or not their primary occupation is farming or an off-farm job.

Some farm characteristics are associated with future plans for further
diversiﬁcation (Table 4.20). As would be expected, farms with larger annual gross
income —more than $500,000 -— are statistically less likely to continue to add enterprises
(98:10.2, p=.04) while medium sized farms in terms of annual gross income -$100,000 -
$249,000 — are more likely to expand their diversiﬁcation. As anticipated the current
extent of farm diversiﬁcation is positively associated with plans to diversify additionally.
The more diversiﬁed a farm or ranch is the more likely they are to continue to add
enterprises. On average, farms and ranchers planning to add more enterprises currently
have four (3.8) enterprises compared to three (3.3.) enterprises for those not planning to
diversify more (F =5.6, p=.02). There is no statistically signiﬁcant relationship between

expansion plans and the farm size and the acreage farmed/ranched.

121

Table 4.20 A comparison of farm/ranch characteristics of those planning and not
planning finther diversiﬁcation.

 

Planning Not Planning
Further Further Sig.
Diversiﬁcation Diversiﬁcation

FamiIRanch’s Characteristics

 

 

 

Farm Gross Sales (n=185)
Less than $50,000 47.4% 52.6% x2=10.2, p=.04
$50,000 - $99,999 53.8% 46.2%
$100,000 - $249,999 65.4% 34.6%
$250,000 - $499,999 56.3% 43.8%
$500,000 or more 20.0% 80.0%
Business Sophistication (n=190)
Availability of a written business plan 34.4% 65.6% {=76 p=.01
Extent of Diversiﬁcation (n=187)
Number of diversiﬁcation categories (mean) 3.8 3.3 F=5.6, p=.02

 

Whether farmers and ranchers are more likely to diversify along enterprise-lines
they are already involved with and therefore, have relevant experience and
complementary facilities and technologies was also examined. Table 4.21 presents the
results of a test of this hypothesis related to AgriTourism and farm and ranch recreation.
Farmers and ranchers were classiﬁed into two segments: farmers not engaged in
AgriTourism (64.3%) and those who were engaged in AgriTourism (35.7%). Statistical
comparisons between these segments were conducted to determine whether farmers and
ranchers who planned to further diversify are more likely to add related enterprises

including recreational activities, restaurants and food services and lodging services.

As it was expected, farms and ranches currently involved in AgriTourism are
statistically more likely to continue to add recreation related enterprises. Over a quarter
of farms engaged in AgriTourism plan to diversify further by adding recreation, tourism
and special events enterprises compared to about ﬁfteen percent (14.5%) of those not

involved in tourism (12:43, p=.03 7). Similarly, statistically more Aglitourism farms

122

(16.9%) are planning to add lodging and accommodation enterprises than farms not

engaged in Agritourism (5.8%; 12:48, p=.028).

Table 4.21 A comparison of future expansion planned by farmers not engaged in
AgriTourism and those engaged in AgriTourism.

 

Engaged Not Engaged

 

 

In Agritourism In Agritourism Sig.
(64.3%) (35.7%)
Enterprises Related to AgriTourism
Recreation, Tourism 8: Special Events 27.7% 14.5% x2=4.3, p=.037
Lodging and Accommodations 16.9% 5.8% x’=4.8, p=.028
Restaurant and Food Services 8.4% 2.9% Not sig.
Enterprises Not Related to AgriTourism
Processing of Foods and Beverages 8.4% 4.3% Not sig
Educational Activities 1 7.8% 8.7% Not sig
Arts and Crafts 5.9% 4.3% Not sig

 

However, it was found that there is no signiﬁcant difference between both segments
regarding their plans for ﬁrrther diversifying in restaurants or other types of food service.
In part this is because on-farm restaurants are rarely the ﬁrst element of farm
diversiﬁcation. They are commonly added only after on-farm visitation reaches a certain
level and there is a critical mass of “things to do” (e.g., recreational and educational
experiences) that increases the length of stay. Besides, other factors such as income and
availability of ﬁnancing, not just their current offerings or even past experience,
inﬂuences the types of diversiﬁcation possible on farms and ranches. As was expected,
there are no signiﬁcant differences in the plans for ﬁrrther diversiﬁcation in enterprises
not related to AgriTourism. Further diversiﬁcation plans in processing of foods and
beverages, educational activities and arts and crafts were not statistically different

between those currently engaged in Agritourism and those not engaged in Agritouri sm.

123

CHAPTERV

GOALS AND SUCCESS BEHIND

AGRICULTURE DIVERSIFICATION

This chapter presents the ﬁndings that address the objectives, research questions
and hypotheses that guided the design of this study. A primary focus is on the types of
goals for diversiﬁcation and their relative signiﬁcance in the decision making process of
farmers/ranchers. This chapter also examines the degree of correlation among various
diversiﬁcation goals with the level of achievement of different economic and non-

economic diversiﬁcation goals.

Chapter V is presented in ﬁve sections. The ﬁrst section provides an overview of
different goals that encourage farmers to diversify their farms and ranches. Section two
identiﬁes the patterns of correlations between diversiﬁcation goals as well as the degree
of association between farm and farmer proﬁles and extent of diversiﬁcation and the
importance assigned to various goals. Section three addresses the extent to which
various goals are being achieved from the farmers’ perspective. The fourth section
provides farmer’s perspectives of the relative success of diversiﬁcation in terms of farm
revenues, net income, overall debt and job creation and support. Finally, this chapter

integrates both the subjective and objective assessment of the impacts of diversiﬁcation.

124

5.1 Reasons Why Farmers and Ranchers Diversify Their Enterprises

Farmers and ranchers were asked about the importance of twenty possible
diversiﬁcation goals. These goals represent a wide spectrum of both economic and non-
economic goals that the literature recognizes as stimulating diversiﬁcation. Two open-
ended categories were included to identify possible goals not already identiﬁed in the

literature.

Table 5.1 Percentage of respondents who considered different goals to be
important reasons for diversifying their farms and ranches.

 

 

Percenta e of
Diversiﬁcation Goals Respondentsg(n=208)
Generate additional income 83.7
Continue fanning/ranching 53.4
Enhance personal/family quality of life 52.4
To generate additional revenues from existing resources 50.5
Respond to a market need/opportunity 49.5
Keep the farrnlranch in the family 47.1
Increase/diversify the market 44.2
Capitalize on an interest/hobby 38.0
Interact with customers 38.0
Educate customers 33.7
Offset ﬂuctuations in farm/ranch revenues 33.2
Generate revenues during off/non-growing seasons 32.7
Provide current customers with new products/services 32.7
Provide a new challenge 32.7
Enhance ability to meet ﬁnancial/loan obligations 29.8
Make farm less dependent on outside factors 26.9
Reduce overall farm/ranch debt 26.4
Reduce impacts of catastrophic events 25.5
Provide employment opportunities for family members 22.1
Qualifyfor state/federal assistance program 12.5

 

The results reveal a broad range of goals, both ﬁnancial and non-ﬁnancial, that
are important in farmers’ decisions to diversify. Table 5.1 presents the percentage of
respondents who consider various goals to be important reasons why they diversiﬁed

their farms or ranches. Two economic goals, the generation of additional income

125

(83.7%) and the generation of additional revenues from existing resources (50.5%) are
important reasons for the development of farm/ranch enterprises. However, a majority
diversiﬁed in part to allow them to continue farming (53.4%) and as a way of enhancing
their (family’s) quality of life (52.4 %). No important new diversiﬁcation motivations

were identiﬁed53 .

Farmers and ranchers were asked separately about the importance of various
reasons for preserving farm and ranch related cultural objects and heritage (Table 5.2).
Important reasons included: the importance of the cultural resource to them and their
family (84.1%); their intrinsic value (46.6%); and the potential to generate resources
(40.9%). What is most surprising is that such a high percentage of farmers and ranchers

are aware of the revenue generating potential associated with cultural heritage.

Table 5.2 Percentage of respondents who considered different goals as
important in the preservation of cultural objects and heritage.

 

 

Goals Related to Historic Preservation Raggﬁggfnggs) .
Importance to me and my family 84.1
Their intrinsic value 46.6
Potential to generate revenues 40.9
Cost savings 23.9
Other goals 10.2

 

3‘ Includes only those farmers and ranchers who have diversiﬁed through historic
preservation and adaptive re-use (42.9%)

Farmers and ranchers were then asked to rank the importance of various goals for

diversiﬁcation on a ﬁve- point Likert scale ranging from “not important” (1) to

 

53 Only 3.4% of the respondents reported goals related to the enhancement of their community as important
in their diversiﬁcation process. These goals included environmental and conservation concerns, the
generation of local economic impact and the farming heritage awareness.

126

“extremely important” (5)“. The distribution and average importance ratings are

reported in Table 5.3.

Table 5.3

Level of importance of different farm and ranch diversiﬁcation goals.

 

Diversiﬁcation Goals ' (n=202)

Level of Importance b

 

 

1 2 3 4 5 Mean
Generate additional income 17.0% 4.0% 10.0% 20.0% 49.0% 3.80
Continue farming/ranching 47.2% 0.5% 1.5% 13.1% 37.7% 2.94
Enhance personal/family quality of life 46.8% - 4.5% 11.4% 37.3% 2.93
Keep the farm/ranch in the family 52.2% -- 3.0% 7.0% 37.8% 2.78
Tﬁegseguerg: additional revenues from ex1$tlng 49.5% 2.0% 10.5% 15.0% 23.0% 2.60
Respond to a market need/opportunity 50.5% 2.0% 9.0% 24.0% 14.5% 2.50
Increase/diversify the market 55.5% 0.5% 4.0% 22.5% 17.5% 2.46
Interact with customers 61.7% 0.5% 7.5% 10.5% 19.9% 2.26
Capitalize on an interest/hobby 62.0% 2.5% 8.0% 14.5% 13.0% 2.14
Educate customers 65.4% 2.0% 5.0% 10.4% 17.3% 2.12
Giggﬁs'evenues durm °ﬁ’"°”'9'°w'”9 67.0% - 4.5% 11.5% 17.0% 2.11
Enhance ability to meet ﬁnancial/loan o o o o o
obligations 70.5 /o 0.5 /0 0.5 A; 7.0 /0 21.5 Ar 2.09
Offset ﬂuctuations in farm/ranch revenues 66.7% 0.5% 7.5% 11.0% 14.4% 2.06
Provide a new challenge 67.2% 1.5% 6.0% 10.5% 14.9% 2.05
Provide current customers with new products 67.5% 1.5% 7.0% 10.0% 14.0% 2.02
Reduce overall farm/ranch debt 74.0% 0.5% 1.0% 5.0% 19.5% 1.96
Make farm less dependent on outside factors 73.1% 1.0% 3.0% 9.0% 13.9% 1.90
Reduce impacts of catastrophic events 75.6% 0.5% 4.0% 7.5% 12.4% 1.81
Provide employment opportunities for family 79.0% 1.0% 3.0% 7.0% 10.0% 1.68
Qualify for state/federal assistance program 87.1% 2.0% 1.5% 4.5% 5.0% 1.38

 

a Two open-ended categories of diversification goals were excluded because the small number
of cases reporting them and the wide range of responses prevented further analysis.
(3) moderately important;

b Anchors: (1) not important;
important; and (5) very important.

(2) somewhat important;

(4) fairly

Generation of additional income is the most prevalent and on average the most

important reason leading to decisions to add diversiﬁed enterprises to Texas farms and

ranches (mean importance=3.8). Almost half (49.0%) of farmers and ranchers consider

this a very important reason why they diversiﬁed. Three other reasons all related to

 

5" The complete scale had the following points: (1) not important; (2) somewhat important; (3) moderately
important; (4) fairly important; and (5) extremely important.

127

perpetuation of farming were also high in importance: the continuance of farming and
ranching (mean=2.94), the enhancement of quality of life (mean=2.93) and keeping the
farm/ranch in the family (mean=2.78). However, it should be noted that about half
(47.2%) felt that continuing in farming was not an important reason why they diversiﬁed,
possibly because they were already committed and able to stay in farming. Enhanced
economic utilization of the farm resources to generate additional income is also an
important reason leading to decisions to diversify (mean=2.6). This includes for
example, the generation of economic activities to keep full time farm labor busy all year-

round.

5.2 Underlying Patterns of Association among Diversiﬁcation Goals

Obviously, more than one goal contributes to a decision to diversify farms and
ranches. In some instances farmers and ranchers are almost evenly divided on whether a
goal is important or not important. This is why it was important to identify the

underlying pattern of relationships among the goals.

Principal component factor analysis with varimax rotation was performed on the
importance ratings that farmers and ranchers assigned to various diversiﬁcation goals for
the purpose of identifying the underlying patterns of relationships among these goals. A
listwise method was used to handle missing values. Only cases/respondents with no

55

missing values were included in the analysis . The varimax-rotated factor matrix

resulted in six factors with eigenvalues that were all over one accounting for 60.9% of the

 

55 The same factor procedure was performed considering only valid data (i.e., pairwise) and replacing

missing values by the average value for the sample. These procedures resulted in the same factors in
terms of number and composition, showing small differences in the factor loadings.

128

variance. An examination Of the scree plot conﬁrmed the suitability Of the six-factor
result (Figure 5.1). A loading higher than 0.50 was the threshold for including a goal as
part of a factor. Reliability analysis (Cronbach’s alpha) shows coefﬁcients higher than
0.50 (minimum value expected) indicating internal consistency Of the variables
comprising each factor. The overall reliability measure was 0.85. “TO educate
customers” did not load on any factor (<05) and obtained similar loadings (between 0.45
and 0.26) in four factors reﬂecting the heterogeneity of this goal. Thus, this goal was

dropped ﬁ'om ﬁrrther analysis.

 

6'l

mmcr><2ﬂlanm
u
l

o - COMPONENT NUMBER

l I IIIIIIII‘I—Illll
12 34 5 6 7 8 91011121314151617181920

 

 

 

Figure 5.1. Scree Plot

The six factors were assigned labels based on the common characteristics of the
goals that loaded on each factor. The factors were labeled as follows: (F1) Reduce

Uncertainty and Risk, (F2) Grow and Service Markets, (F3) Enhanced Financial

129

Condition, (F4) Individual Aspirations and Pursuits, (F 5), Revenues Enhancement, and
(F6) Farrrily Connections. Table 5.4 displays the six factors Obtained, the goals that
loaded in each factor and their corresponding loadings, the Cronbach’s alpha reliability

coefﬁcients, eigenvalues, and percentage Of variance explained by each factor.

Table 5.4 Rotated factor matrix Of the goals for farm and ranch diversiﬁcation.

 

Factor Explained

 

 

 

 

 

 

 

Factors and Goals (n=195) Lo a dings Variance (%) Eigenvalue
Reduce Uncertainty and Risk (F1) (a=.74) ' 14.34 5.38
Offset ﬂuctuations in farm/ranch revenues .765
Reduce impacts Of catastrophic events .754
Make farm less dependent on outside factors .626
Continue farming/ranching .568
Grow and Service Markets (F2) (n=.71) 11.32 1.86
Provide current customers with new products/services .732
Generate revenues during Off/non-growing seasons .597
Respond to a market need/opportunity .576
Increase/diversiy the market .572
Enhanced Financial Condition (F3) (n=.66) 10.09 1.58
Enhance ability to meet ﬁnancial/loan Obligations .811
Reduce overall farm/ranch debt .740
Qualify for state/federal assistance program .540
Personal Aspirations and Pursuits (F4) (n=.60) 9.83 1.32
Capitalize on an interest/hobby . .740
Provide a new challenge .691
Enhance quality Of life .538
Interact with customers .501
Revenue Enhancement (F 5) (a=.56) 7.88 1.09
Generate additional income .813
TO generate additional revenues from existing
resources .625
Family Connection (F6) (n=.53) 7.50 1.03
Keep the farm/ranch in the family .714
Provide employment Opportunities for family members .630
Total Variance Explained 60.96

 

a. Cronbach’s alpha reliability coefficients for domains. Overall reliability (a=.85)

Factor 1, Reduce Uncertainty and Risk, comprised four goals and explained
13.4% Of variance in the data, with an eigenvalue Of 5.4. The alpha reliability coefﬁcient

for this factor was the highest Obtained (a=.74). The four different goals that loaded on

130

F1 relate to the uncertainty and risk associated with farming including the ﬂuctuations Of
the agriculture revenues originated by the variations in the commodities prices; the
existence Of catastrophic events (e.g., droughts, ﬂoods) that frequently threaten farmers
and ranchers, independence from outside factors (e.g., be a price setter instead of a price
taker), and the perpetuation Of farmers and ranchers in agriculture business. The four
goals that loaded on this factor and contributed tO its naming are: (l) Offset ﬂuctuations
in farm/ranch revenues; (2) Reduce impacts Of catastrophic events; (3) Make the farm

less dependent on outside factors; and (4) To continue farming/ranching.

The second factor, Grow and Service Markets, explained 11.3% Of variance in the
data, with an eigenvalue Of 1.9 and an alpha reliability coefficient Of 0.71. The four goals
that comprise this factor (F2) are associated in some way with the retaining and
expanding markets. They include: providing current customers with new
products/ services; generating revenues during Off/non-growing seasons; respond to

market needs/opportunities and diversifying markets.

The Enhanced Financial Condition factor (F3) includes goals associated with the
ﬁnancial wellbeing and performance of farm and ranch businesses. This factor explained
10.1% Of variance, had an eigenvalue Of 1.6 and an alpha reliability coefﬁcient Of 0.66.
These goals included: enhancing the ability to meet ﬁnancial Obligations, the reduction Of
the farm debt, and the ability tO qualify for an assistance program. Conversely, the four
goals that make up the Individual Aspirations and Pursuits factor (F4) are personal in
nature including tO capitalize on an interest/hobby; diversiﬁcation as a new challenge;
enhanced quality Of life; and tO interact on a personal level with customers. F4 have 9.8%

Of explained variance and 1.3 for eigenvalue (Cronbach’s a=.6).

131

The Revenues Enhancement factor (F 5) comprised two goals and explained 7.8%
Of variance with an eigenvalue Of 1.1 (Cronbach’s 01=.6). This factor is related tO two
principal goals: the generation Of additional income derived for example from the
additional value added to the agriculture product and the maxirrrurn utilization Of the farm
resources including land, capital and labor. Diversifying to keep the farm in the family
and to generate employment for family members loaded on the last factor named Family
Connections (F6). F6 had an eigenvalue Of 1.03, 7.5% Of explained variance and a

reliability coefﬁcient just above the standard minimum acceptable (01=.5 3).

Signiﬁcant Differences in the Importance Assessment of Goals by Factors

According to the goal-directed behavior model discussed in Chapter 11, internal
and external stimuli can affect the hierarchical organization and the importance Of
individuals’ goals. Recognizing this, tests Of association were preformed between the
diversiﬁcation goals prominently identiﬁed with the six factors and various farm and
farmer/rancher characteristics and extent Of diversiﬁcation. Farm and ranch
characteristics included farm size '—measured in terms Of acres farmed and annual gross
income--, and farm structure measured by the extent Of tenure and farm organizational
structure. F armer/rancher characteristics included their socioeconomics (i.e., gender, age
and level of education), on/Off farm employment status and their family attachment tO the
farm (i.e., number of generations on the farm, number Of family employees and whether

farming is the main occupation Of the operator).

132

Table 5.5 Differences in the importance assessment Of goals loaded in the Reduce
Uncertainty and Risk factor (F1) by farm characteristics, farmer proﬁle and
extent Of diversiﬁcation.

 

Importance Assessment of Goals -
Reduce Uncertainty and Risk Factor (F1)'

Variables (n=200) Offset R°du°° Make farm less

 

 

. impacts of Continue
ﬂuctuations in de ndent on
farm revenues catastrophic outgiede factors taming
events
Acres Farmed
Less than 50 acres 1.8 1.6 1.8 2.5
50 - 149 1.9 1.7 1.7 2.6
150-999 1.8 1.5 1.6 2.8
1000 acres or more 2.6 2.3 2.4 3.7

Level of Signiﬁcance F=3.97, p=.009 F=2.66, p=.050 F=2.81, p=.041 F2512, p=.002
Annual Farm Gross Sales

 

Less than $50,000 1.7 1.5 1.6 2.7
$50,000 - $99,999 2.1 1.7 1.8 2.7
$100,000 - $499,999 2.6 2.3 2.2 3.2
$500,000 or more 2.6 2.7 2.8 3.6

Level of Signiﬁcance F=4.26, p=.006 #630, p<.001 F=3.83, p=.0‘l1 Not Sig.
Tenure Structure "

 

Only farm owned land 1.9 1.7 ' 1.7 2.9
Farm mostly owned land 2.7 2.1 2.5 3.1
Equally farm owned and

rented land 3.1 2.7 3.0 3.4
Farm mostly rented land 1.8 2.2 2.1 3.6
Only farm rented land 1.6 1.9 1.9 2.2

Level Of Signiﬁcance F=2.66, p=.034 Not 3g F=2.97, p=.021 Not Sig.
Operators’ Age

 

 

Less than 45 years 2.3 2.4 2.0 2.7
45-64 years 2.0 1.7 1.9 2.9
65 years or Older 2.0 1.6 1.8 2.8
Level Of Signiﬁcance Not Sig. F=4.19, p=.016 Not 81L Not Sig_.__
Number of Generations in the Farm
First generation in the farm 1.7 1.6 1.5 2.6
At least second generation 2.6 2.2 2.5 3.4

Level of Signiﬁcance P=15.69,p<.oo1 F=7.37,p=.007 F=20.27,p<.001 F=8.66,p=.004
Farmers Principal Occupation

 

 

Farming or Ranching 2.3 1.9 2.0 3.1
Not farming or ranching 1.7 1.6 1.7 1.6
Level of Signiﬁcance F=7.81, p=.006 Not Sig Not Sig. F=4.19, p=.042
Extent of Diversiﬁcation
Lightly diversiﬁed 1.6 1.5 1.5 2.7
Moderately diversiﬁed 2.0 1.7 1.9 3.0
Highly diversiﬁed 2.6 2.2 2.3 3.1

Level Of Signiﬁcance F=4.90, p=.008 F=3.40, p=.035 F=3.42, p=.035 Not Sig.
Anchors: (1) not important; (2) somewhat important; (3) moderately important; (4) fairly important;
and (5) very important.

Farm mostly owned land’ refers to those that own at least 60% Of the land farmed; ‘Equally farm
owned and rented Iand' refers to those whose ratio between acreage owned and rented is within
40/60; and ‘Farm mostly rented Iand’ refers to those that farmed at least 60% Of rented acreage.

133

The level of importance assigned to the goals that compose the reduce uncertainty
and risk factor (F 1 ), are statistically related to the characteristics of farms and farmers.
Larger farms, in terms of acreage and gross sales, assign greater importance to goals
related to reduce uncertainty and risk (F 1) (Table 5.5) 56. Tenure structure of farms
have an association with the relative importance “offsetting ﬂuctuations in farm
revenues” and “making farm less dependent on outside factors” in the decision to
diversify. Those who equally farm land they own and rented land consider both goals
more important than farmers who exclusively farm either land that they own or land that
they rent. The importance of the F 1 diversiﬁcation goals was not statistically related to

farm organization.

As might be anticipated younger farmers (those less than 45 years old) view
reducing the effects from catastrophic events (F =4.19, p=.016) to be a more important
reason to diversify than older farmers. Obviously, younger farmers are less well
established and therefore not as capable of absorbing large ﬁnancial losses. Interestingly,
ﬁrst generation farmers and ranchers place signiﬁcantly less importance on the F1 goals
than those whose families have been engaged in farming for multiple generations. This
may be because new farmers appear to be more entrepreneurial and have less experience
with the cyclical ups-and-downs of farning and the constant struggle to remain viable.
They are also more likely to view the farm or ranch as a business rather than a legacy. It
is understandable why multiple generation farmers and ranchers would be more likely to
diversify to enhance certainty and control. As was expected, farmers and ranchers

whose primary occupation is farming view offsetting ﬂuctuations in farm revenues and

 

56 The ANOVA performed between the annual gross sales in the importance level of the goal “To continue
farming and ranching” was not signiﬁcant

134

as a means of continuing farming as more important reasons to diversify. Gender, level
of education and on/off-farm employment are not statistically associated with the

importance farmers assign the various diversiﬁcation goals that makeup F1.

Very interestingly, more highly diversiﬁed farmers and ranchers consider
reducing uncertainty and inﬂuence of outside forces as more important reasons to
diversify than the operators of less diversiﬁed farms and ranches. However, no
differences were found regarding the importance of diversifying as a means to continuing
farming across different levels of diversiﬁcation. Some of the goals that comprise the
Grow and Service Markets Factor (F2) are only related to a few farm, farmer/rancher and
extent of diversiﬁcation characteristics. The size of farms and ranches is associated with
the importance that “responding to market needs/opportunities” play in diversiﬁcation
decisions (Table 5.6). Operators of smaller farms, less than 50 acres, are more likely to
consider this goal to be an important reason for diversifying. This result is not surprising
since many smaller farms are surviving and prospering by identifying and responding to
special or niche markets. Gross sales and farm structure indicators (i.e., tenure and
organization) are not signiﬁcantly related to the importance farmers and ranchers place

on F2 related goals as a reason for diversifying their farms or ranches.

135

Table 5.6 Differences in the importance assessment of goals loaded in the Grow and
Service Markets factor (F2) by farm characteristics, farmer proﬁle and
extent of diversiﬁcation.

 

Importance Assessment of Goals -
Grow and Service Markets (F2) '

Variables (n=200) Provide current 23:73:: Respond to a Increase!
customers with market need! diversify the

 

 

 

 

 

 

 

 

new products dsigggg opportunity market
Acres Farmed
Less than 50 acres 2.2 2.1 3.1 2.5
50 - 149 2.3 1.9 2.4 2.7
150 - 999 1.5 1.9 2.4 2.4
1000 acres or more 1.9 2.4 2.0 2.3
Level of Signiﬁcance Not SkL Not Sig. F=5.28, p=.002 Not Sig.__
Annual Farm Gross Sales
Less than $50,000 1.9 1.8 2.5 2.3
$50,000 - $99,999 2.1 2.3 2.9 2.7
$100,000 - $499,999 2.2 2.2 2.6 2.8
$500,000 or more 2.4 2.8 2.4 2.6
Level of Signiﬁcance Not g1 Not SiL Not Sig. Not Sig.—
, Tenure Structure "
Only farm owned land 2.0 2.2 2.6 2.5
Farm mostly owned land 2.5 2.2 2.6 2.6
Equally farm owned and
rented land 2.2 1.8 2.2 2.4
Farm mostly rented land 2.1 1.9 2.4 2.1
Only farm rented land 1.7 1.3 2.1 1.8
Level of SQr'rﬁcance Not Sig. Not g9. Not Sig. Not SiL
Operators’ Gender
Male 2.1 2.3 2.5 2.6
Female 1.9 1.5 2.6 2.2
Level of Signiﬁcance Not Sig. F=10.40, p=.001 Not Sig Not Sig.__
Number of Generations in the Farm
First generation in the farm 2.1 2.1 2.7 2.5
At least second generation 1.9 2.2 2.2 2.4
Level of Signiﬁcance Not Sig Not Sig. F=5.10, p=.025 Not SiL
Farmers Principal Occupation
Farming or Ranching 2.1 2.2 2.5 2.5
Not farming or ranching 1.9 1.9 2.5 2.4
Level of Signiﬁcance Not Sig. Not Sig. Not Sig. Not Sig.
Extent of Diversiﬁcation
Lightly diversiﬁed 1.2 1.6 1.9 1.9
Moderately diversiﬁed 2.0 2.3 2.6 2.6
Highly diversiﬁed 2.9 2.2 2.9 2.8

Level of Signiﬁcance F=19.13, p<.001 F=3.16, p=.044 F=6.30, p=.002 F=4.98, p=.008
a Anchors: (1) not important; (2) somewhat important; (3) moderately important; (4) fairly
important; and (5) very important.
Farm mostly owned land' refers to those that own at least 60% of the land farmed; ‘EquaI/y farm
owned and rented Iand’ refers to those whose ratio between acreage owned and rented is within
40/60; and ‘Farm mostly rented Iand’ refers to those that farmed at least 60% of rented acreage.

136

Several farmer and rancher characteristics are related to the importance that
various F2 goals have in decisions whether or not to diversify. First generation farmers
consider “responding to a market needs/opportunities” to be an important reason to
diversify (mean=2.7). Again, this is possibly due to the fact that these farmers may be
required to be more entrepreneurial and market focused because they are new to farming
and likely entered as a non-traditional farmer. For some reason, male operators assign
much greater importance to the generation of off-seasons revenues (mean=2.3) as a

reason for diversifying than women operators (mean=1.5).

The extent of diversiﬁcation is positively associated with the Grow and Service
Market Factor. The more diversiﬁed a farm or ranch, the greater importance their
operators place on growing and servicing markets. This might be in part because heavily
diversiﬁed farmers are engaged in enterprises that require them to be more marketing
oriented and sensitive, and they are likely to respond to market opportunities by adding
new and related enterprises. They switch from a wholesale to a direct marketing
orientation. It is often the case that the customers of diversiﬁed farms and ranches
recommend additional products and services that they desire or need and this stimulates

additional diversiﬁcation.

137

Table 5.7

Differences in the importance assessment of goals loaded in the Enhanced

Financial Condition factor (F 3) by farm characteristics, farmer proﬁle and
extent of diversiﬁcation.

 

Importance Assessment of Goals -
Enhanced Financial Condition (F3) '

 

 

 

 

 

 

 

 

 

Variables (n=200) Enhance ability to Qualify for state!
meet ﬁnancial] 2.227313; 32:): federal assistance
loan obﬂggtions program
Acres Farmed
Less than 50 acres 2.2 2.1 1.4
50 - 149 1.5 1.5 1.4
150 - 999 2.1 1.7 1.3
1000 acres or more 2.4 2.3 1.4
Level of Signiﬁcance Not Sig. Not Sig. Not Sig
Annual Farm Gross Sales
Less than $50,000 1.9 1.8 1.5
$50,000 - $99,999 1.8 1.4 1.1
$100,000 - $499,999 2.2 2.2 1.2
$500,000 or more 3.1 2.9 1.2
Level of Signiﬁcance F=3.23, p=.024 F=4.04Q=.008 Not Ski
Organization Structure
Individual proprietorship ° 1 .9 1 .8 1.4
Non-individual proprietorship 2.5 2.2 1.4
Level of Signiﬁcance F=5.59,p=.019 Not Sig. Not Sig
Operators’ Age
Less than 45 years 1.9 2.3 1.2
45-64 years 2.2 1.9 1.4
65 years or older 1.8 1.6 1.6
Level of Signiﬁcance Not Sig. Not Sig. Not Sig.
Operator’s Level of Education
At least some school 3.2 2.6 1.6
At least some college 2.1 2.0 1.4
At least some graduate studies 1.8 1.7 1.3
Level of Signiﬁcance F=5.75, p=.004 Not Sig. Not Sig
Number of Generations on the Farm
First generation on the farm 2.0 1.9 1.3
At least second generation 2.2 2.0 1.5
Level of Signiﬁcance Not Sig. Not Sig. Not Sig.
Farmers Principal Occupation
Farming or Ranching 2.2 2.1 1.5
Not farming or ranching 2.0 1.7 1.2
Level of Signiﬁcance Not Sig. Not Sig. Not Sig._
Extent of Diversification
Lightly diversiﬁed 1.8 1.4 1.3
Moderately diversiﬁed 2.1 2.1 1.4
Highly diversiﬁed 2.4 2.3 1.4
Level of Signiﬁcance Not Sig. #350, p=.011 Not Sig.

 

a Anchors: (1) not important; (2) somewhat important; (3) moderately important; (4) fairly

important; and (5) very important
b Includes family and individual farms.

138

Whether or not the goals that compose the Enhanced Financial Condition factor
(F 3) are important in deciding to diversify is statistically associated with the amount of
annual farm sales, how the farm business is organized, the education level of the
operator, and the current diversiﬁcation extent of the farm”. Diversifying as a way to
better meet ﬁnancial obligations and to reduce overall farm debt was more important to
operators of farms and ranches with larger gross sales ($500,000 +) (Table 5.7). Farms
and ranches organized as corporations similarly considered the “enhancement to meet
ﬁnancial obligations” goal as important reasons to diversify. Interestingly the farmers
and ranchers who are most diversiﬁed placed more importance on debt reduction as a
reason to diversify even though diversiﬁcation does not generally lead to reduced debt

and may actually require taking on additional debt in the early stages.

Very few of the farm, farmer or extent of diversiﬁcation variables were
statistically associated with the diversiﬁcation goals comprising the Personal Aspirations
and Pursuits factor (F4). Small farms (less than 50 acres) and ﬁrst-generation farmers
assign more importance to interacting with customers as a reason for diversifying (Table
5.8). Farmers and ranchers who have diversiﬁed the most consider the opportunity to
capitalize on a hobby and interact with customers more important than less diversiﬁed
operators. This may in part reﬂect the more out-going personalities of the operators and
also that once they begin down the diversiﬁcation road they see more opportunities to
incorporate and market products and services related to their hobbies and special interests
(e.g., theater, food, music). In some instances these diversiﬁed farms evolve to reﬂect the

personality and interests of the operators. Also, as farms diversify more and attract larger

 

57 Diversifying to qualify for state/ federal assistance programs was not found to be associated with any of
the variables tested.

139

and more diverse markets, it is sometimes more feasible to incorporate hobby and

personal interest related services and products as part of their enterprise lines.

Table 5.8

Differences in the importance assessment of goals loaded in the Personal

Aspirations and Pursuits factor (F4) by farm characteristics, farmer proﬁle

and extent of diversiﬁcation.

 

Importance Assessment of Goals -

Personal Aspirations and Pursuits Factor (F4) '

 

Variables (n=200)

Capitalize on a Provide a new Enhance

Interact with

 

 

 

 

 

 

interest/hobby challengg quality of life customers
Acres Farmed .
Less than 50 acres 2.3 1.9 2.9 2.9
50 - 149 2.1 2.4 3.0 1.9
150 - 999 2.6 2.3 3.1 2.1
1000 acres or more 1.9 1.7 2.8 1.9
Level of Signiﬁcance Not Sig. Not Sig. Not Sig F=3.72, p=.012
Annual Farm Gross Sales ,
Less than $50,000 2.3 1.9 2.9 2.3
$50,000 - $99,999 2.2 2.2 3.2 2.4
$100,000 - $499,999 2.0 2.3 2.9 2.4
$500,000 or more 1.6 1.6 2.6 2.0
Level of Shﬂiﬁcance Not Sig. Not Sig. Not Sig. Not Sig.
Organization Structure
Individual proprietorship " 2.2 2.2 3.0 2.4
Non-individual proprietorship 2.0 1.8 2.8 2.2
Level of Signiﬁcance Not Sig Not Sig Not Sig. Not Sig.
Number of Generations on the Farm
First generation on the farm 2.2 2.1 2.8 2.4
At least second generation 2.0 1.9 3.1 1.9
Level of Signiﬁcance Not Sig. Not Sig Not Sig F=4.13, p=.044
Farmers Principal Occupation
Farming or Ranching 2.1 2.0 2.9 2.3
Not farming or ranching 2.2 2.1 2.8 2.3
Level of Signiﬁcance Not Sig Not Sig.__ Not Sig. Not Sig.
Extent of Diversiﬁcation
Lightly diversiﬁed 1.7 1.7 2.8 1.8
Moderately diversiﬁed 2.3 2.1 2.8 2.1
Highly diversiﬁed 2.4 2.4 3.3 2.9
Level of Signiﬁcance F=3.21, p=.043 Not Sig. Not Sig. F=8.18, p<.001

 

a Anchors: (1) not important; (2) somewhat important;

important; and (5) very important
b Includes family and individual farms.

140

(3) moderately important; (4) fairly

There is a universal importance of revenue and income generation as a reason for
diversifying farms and ranches. Diversiﬁed farmers, regardless of their farm
characteristics, consider the goals related to the Revenue Enhancement factor (F 5)
likewise important. Longer term, multigenerational farmers, and more diversiﬁed
operators place signiﬁcantly more importance on diversiﬁcation’s potential for increasing
revenues and productivity of existing farm resources as a reason for diversifying (Table

5.9).

The importance operators assign to the goals comprising the Family Connection
Factor (F6) is statistically associated with farm size and the number of family generations
engaged in farming. Diversifying to keep the farm/ranch in the family is viewed as
being a more important goal by the operators of farms and ranches with more than 1000
acres, and also multi-generational farms and ranches. Obviously these farmers and
ranchers have longer term ties and larger investments in their farms and ranches (Table

5.10).

The opportunity to employ more family members on the farm or ranch is
statistically more important as a reason for diversifying to the operators of more highly
diversiﬁed farms and ranches, ones that employ more family members, and ones with
$500,000+ in annual sales. It appears that the chance to provide family members with
employment opportunities and the need/beneﬁt of employing family members are related

to decisions to diversify for some but not all operators.

141

Table 5.9 Differences in the importance assessment of goals loaded in the Revenue
Enhancement factor (F 5) by farm characteristics, farmer proﬁle and extent

 

 

 

 

 

 

 

 

 

of Diversiﬁcation.
Importance Assessment of Goals -.
= Revenue Enhancement Factor (55)
Variables (n 200) Generate additional To generate additional revenues
income from existingresources
Acres Farmed
Less than 50 acres 3.8 2.4
50 - 149 3.8 2.4
150 - 999 3.8 2.5
1000 acres or more 3.8 3.1
Level of Signiﬁcance Not Sig. Not Sig.
. Annual Farm Gross Sales
Less than $50,000 3.6 2.5
$50,000 - $99,999 4.2 2.7
$100,000 - $499,999 3.9 3.0
$500,000 or more 3.7 2.2
Level of Signiﬁcance Not Sig Not Sig.
Tenure Structure h
Only farm own land 3.8 2.6
Mostly farm own land 4.1 3.0
Evenly farm own & rented
land 4.7 3.0
Mostly farm rented land 3.8 2.3
Only farm rented land 3.2 1.6
Level oﬁigniﬁcance Not Sig. Not Sig.
Operators’ Age
Less than 45 years 3.8 2.5
45—64 years 3.9 2.7
65 years or older 3.4 2.2
Level of Signiﬁcance Not Sig Not Sig.
Number of Generations in the Farm
First generation in the farm 3.9 2.3
At least second generation 3.8 3.0
Level of Signiﬁcance Not Sig F=8.56, p=.004
Farmers Principal Occupation
Farming or Ranching 3.8 2.7
Not farming or ranching 3.8 2.4
Level of ﬁgniﬁcance Not Sig. Not Sig.
Extent of Diversiﬁcation
Lightly diversiﬁed 3.4 1.9
Moderately diversiﬁed 3.9 2.9
Highly diversiﬁed 4.0 2.8
Level of ﬂgniﬁcance Not Sig. F=7.07, p=.001

 

a Anchors: (1)not important; (2) somewhat important; (3) moderately important; (4) fairly

important; and (5) very important

" 'Farm mostly owned land’ refers to those that own at least 60% of the land farmed; ‘Equally farm
owned and rented land' refers to those whose ratio between acreage owned and rented is within
40/60; and “Farm mostly rented Iand’ refers to those that farmed at least 60% of rented acreage.

142

Table 5.10 Differences in the importance assessment of goals loaded in the Family
Connection factor (F6) by farm characteristics, farmer proﬁle and extent

 

 

 

 

 

 

 

 

 

of diversiﬁcation.
Importance Assessment of Goals. -
. = Family Connection Factor (F6)
Variables (n 200) Keep the farrnlranch Provide employment
in the family opportunities for family members
Acres Farmed
Less than 50 acres 2.1 1.7
50 - 149 2.8 1.4
150 - 999 2.5 1.5
1000 acres or more 3.7 1.9
Level of Signiﬁcance F=7.52,g<.001 Not Sig.
Annual Farm Gross Sales
Less than $50,000 2.7 1.6
$50,000 - $99,999 2.4 1.2
$100,000 - $499,999 2.8 1.8
$500,000 or more 3.6 2.6
Level of Signiﬁcance Not ﬁg. F=4.22, p=.006
Tenure Structure r
Only farm own land 2.7 1.5
Mostly farm own land 3.6 2.7
Evenly farm own & rented land 2.8 1.8
Mostly farm rented land 2.7 1.4
Only farm rented land 2.4 1.4
Level of Signiﬁcance Not 8g #3.“, p=.010
Operator’s Level of Education
At least some school 3.3 2.3
At least some college 2.8 1.8
At least some graduate studies 2.6 1.4
Level of Signiﬁcance Not Sig $3.24, p=.041
Number of Generations on the Farm
First generation on the farm 2.2 1.6
At least second generation 3.8 1.9
Level of Signiﬁcance F=37.4, p<.001 Not Sig.
Number of Family Employees
None 2.9 1.3
One 2.6 1.7
Two 2.7 1.6
Three or more 2.0 2.2
Level of Signiﬁcance Not Sig. F=3.25, p=.023
Extent of Diversiﬁcation
Lightly diversiﬁed 2.5 1.1
Moderately diversiﬁed 2.9 1.8
Highly diversiﬁed 2.9 1.9
Level of Signiﬁcance Not Sig. F=6.3, p=.002

 

and (5) very important.

U

Anchors: (1) not important; (2) somewhat important; (3) moderately important; (4) fairly important;

Farm mostly owned land’ refers to those that own at least 60% of the land farmed; ‘Equally farm

owned and rented land’ refers to those whose ratio between acreage owned and rented is within
40/60; and ‘Farm mostly rented Iand’ refers to those that farmed at least 60% of rented acreage.

143

5.3 Farm Diversiﬁcation Assessment - The Farmers’ Perspective

To develop a better understanding of farmers’ and ranchers’ perceptions of
whether diversiﬁcation had enhanced their farm/ranch (e.g., improved ﬁnancial
condition, enhanced life-style) they were asked whether they would make the decision to
diversify again and if they would recommend others to diversify their farm. They were

provided an opportunity to explain their assessments in an open-ended question.

Table 5.11 Percentages of farmers and ranchers who would decide again to
diversify and recommend diversiﬁcation to other farmers and

 

 

 

 

 

ranchers.
Overall Accomplishment Rﬁmﬁgm
Would Diversify Again (n=186)
Respondents that would not diversify again 2.7
Respondents that would diversify again 97_.3
Reasons why they wou_ld divers'ﬂ again:
Business related (e.g., provide cash ﬂow) 52.9 a
Personal/family rewards 33.3
Community return 8.0
Combined (from above) reasons 5.8
Willingness to Recommend Diversification (n=182)
Respondents that would not recommend diversiﬁcation 5.5
Respondents that would recommend diversiﬁcation g4._5
B_e_a§ons why they would recommend:
Business related (e.g., provide cash ﬂow) 64.1 b
Personal/family rewards 12.7
Conditional to farmers resources 12.7
Community return 7.5
Combined (from abovg) reasons 3.0

 

a This is the percentage of respondents that would diversify their farms again.
b This is the percentage of respondents that would recommend other farmers to diversify.

The vast majority (97.3%), almost all, farmers and ranchers perceive that
diversiﬁcation was beneﬁcial in that it helped them achieve various business, personal

and family objectives (Table 5.11). More than half (52.9%) of these, would diversify

144

again because of the positive impact in their farm business experienced after
diversiﬁcation, mostly because of ﬁnancial and marketing successes. The marketing
beneﬁts cited include: increased customer base, the expansion of the farm sales in
different seasons year, and the more productive use of labor and resources throughout the
year. The following quotes from farmers and ranchers exemplify these beneﬁts of

diversiﬁcation:

“The year that we began selling our ‘value-added ’ products was a particularly
bad late summer season for the farm (due to weather). The addition of our value-
added products seemed to bring people to the farm stands who may have not bothered
to stop (...) ”

“ We need over a hundred crops to feel somewhat safe that some of them will
make it! Value added items help create more cushion during lean times. ”

A third of the respondents (33.3%) considered personal and family beneﬁts as a
primary reason why they would diversify again. These beneﬁts include: enhanced family
economic situation, the opportunity to have family members involved on the farm or
ranch, personal development (e.g., increase of knowledge) and associated intrinsic
rewards. The following statements identify some of the family/personal rewards that

diversiﬁcation bring to farm households:

“Income from raising farm animals was not enough to support the needs of my
family ”

“This endeavor has given me the opportunity to work with my family in areas that
I never could have in any other ”

“It is a rewarding, enjoyable experience that has given us an entirely new way of

life, provided new challenges, and given us the opportunity to meet people in a totally
diﬂerent environment and culture. We have learned a great deal (...) ”

145

Similarly, the majority of respondents (94.5%) would recommend other farmers
and ranchers to diversify their operations. Almost two thirds (64.1%) would recommend
others to diversify because of the associated economic beneﬁts. Fewer (12.7%) would
base their recommendation on personal beneﬁts. Interestingly, 12.7% would recommend
diversiﬁcation to other farmers and ranchers only with certain conditions and
requirements. These conditions include a willingness for a hard work, the ability to
interact with customers and the capacity to be always innovative. Some would only
recommend diversiﬁcation depending on the location of the farm or ranch (e. g., relative
to markets and highways) and the availability of start-up capital. As a case in point, two

farmers and ranchers offered these comments:

“Yes, and No! Diversification is not for everyone. You have to be willing to
think ‘outside the box’ and not too many folks are that open minded, in our neck
of the woods. You have to be open to change (...) ”

“Only if you like people and want to put yourself into your business. It is not a
job but a lifestyle. ”

The results indicate that the vast majority of farmers and ranchers who have
diversiﬁed their operations perceive that it has produced various beneﬁts -both economic
and non-economic- to their business, their families and their communities. Moreover,
respondents consider diversiﬁcation as a viable strategy that can be adopted by other
farmers and ranchers. However, personal, ﬁnancial and business conditions reported to
be necessary for the adoption of diversiﬁcation indicates that although very satisfactory,

farm diversiﬁcation is not an easy strategy.

146

Accomplishment of Diversiﬁcation Goals

Farmers and ranchers who indicated that various goals were somewhat,
moderately, fairly and extremely important were asked to indicate their perceptions about
the degree that they have been accomplished. They evaluated accomplishment on a
three-point Likert type scale including “Not Accomplished” (l ), “Partially Accomplished
(2), and “Completely Accomplished” (3). They were not asked about accomplishment of
any goals that were not important reasons for them diversifying. Table 5.12 presents the

perceived level of achievement of the twenty goals.

Table 5.12 Level of achievement of different diversiﬁcation goals”.

 

Level of Achievement b

 

 

Diversiﬁcation Goals 1 2 3 Mean
Provide a new challenge (32.7%)° 3.2% 35.9% 60.9% 2.58
Interact with customers (38.0%) 4.1% 51.3% 44.6% 2.41
Continue farming/ranching (53.4%) 5.7% 48.6% 45.7% 2.40
Keep the farm/ranch in the family (47.1%) 10.5% 41.1% 48.4% 2.38
Capitalize on an interest/hobby (38.0%) 5.3% 55.2% 39.5% 2.34
Enhance personal/family quality of life (52.4%) 9.7% 50.5% 39.8% 2.30
Provide current customers with new products (32.7%) 8.3% 55.0% 36.7% 2.28
Educate customers (33.7%) 4.5% 64.2% 31.3% 2.25
Provide employment opportunities for family (22.1%) 9.8% 56.1% 34.1% 2.24
Respond to a market need/opportunity (49.5%) 10.3% 59.8% 29.9% 2.20
Increase/diversify the market (44.2%) 8.1% 65.5% 26.4% 2.18
Generate additional income (83.7%) 15.3% 57.1% 27.6% 2.12
Gegggaégkgddltlonal revenues from eXlstlng resources 17.2% 56.5% 26.3% 209
Make farm less dependent on outside factors (26.9%) 9.9% 72.5% 17.6% 2.08
Gegggaﬁ/orfvenues during off/non-growmg seasons 25.0% 453% 29.7% 205
Offset ﬂuctuations in farm/ranch revenues (33.2%) 19.1% 61.9% 19.0% 2.00
Enlzggcae‘gblllty to meet ﬁnanCIal/loan obllgatlons 15.8% 75.4% 8.8% 1.93
Qualify for stateliederal assistance program (12.5%) 36.0% 36.0% 28.0% 1.92
Reduce impacts of catastrophic events (25.5%) 24.5% 61.2% 14.3% 1.90
Reduce overall farm/ranch debt (26.4%) 25.5% 62.7% 11.8% 1.86

 

a Only include those participants that considered this goal important to diversify.

b Anchors: (1=Not Accomplished; 2=Partially Accomplished; 3=Completely Accomplished).

° Percent of the farmers and ranchers who considered “Provide a new challenge” as a
somewhat, moderately, fairly or extremely important reason for diversifying.

147

Overall, there is a high level of perceived accomplishment of the important goals
that inﬂuenced farmers and ranchers to diversify. Sixteen of the twenty diversiﬁcation
goals were at least “Partially Accomplished” (mean = 2+). The goals that had the
highest level of accomplishment were to “Provide a new challenge” (mean=2.5 8), “To
interact with customers” (mean=2.4l) and “To continue farming/ranching” (mean=2.40).
Conversely, the goals with the lowest levels of accomplishment were to “Qualify for

state/federal assistance programs” (mean=l .92), “Reduce impacts of catastrophic events

(mean=l .90) and “Reduce overall farm/ranch debt” (mean=1.86).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.0
3.5 \ l \ ’
l—nu—w-e—W- Mean
(3.3)
3.0
2.5
Mean
(2.2
2.0 )
1.5.....sfs....Ts,....
1234567891011121314151617181920
Diversiﬁcation Goals
1. Keep the farm/ ranch In the family 11. Enhance ability to meet financial/loan
2. Continue farming] ranching obligations
3. Generate additional income 12. Provide employment opportunities for
4. Generate revenues during off/non growing family members
seasons 13. Respond to a market need/opportunity
5. Reduce Impacts of catastrophic events 14. Increase] diversify the market
6. Offset fluctuations In farm/ranch revenues 15. Provide current customers with new
7. Generate additional revenues from existing products
resources 16. Interact with customers
8. Qualify for state/federal assistance 17. Educate customers
program 18. Make farm less dependent on outside factors
9. Capitalize on a interest/hobby 19. Provide a new challenge
10. Reduce overall farm/ranch debt 20. Enhance personal/family quality of life

 

Figure 5.2. Levels of Goals Importance and Accomplishment

148

 

Figure 5.2 graphically compares the relative importance (1 = somewhat
important; 4 = extremely important) of the twenty goals with the perceived degree of
accomplishment (1= not accomplished; 3= completely accomplished). The importance
accomplishment graph reveals that for the most part farmers and ranchers perceive that
they are accomplishing the most important of these goals. To keep the family farm and
ranch in the family (Goal 1) and to continue farming and ranching were considered
among the most important reasons for diversiﬁcation and farmers and ranchers perceive
that these goals are being accomplished. However, two important goals - to reduce the
farm/ranch debt (Goal 10) and to enhance the ability to meet ﬁnancial obligations - (Goal
II) had the lowest degree of perceived accomplishment. This may be related to the fact
that farmers and ranchers who diversify often take on additional debt to ﬁnance the

startup of new enterprises.

Table 5.13 integrates and presents: (1) the number of farmers who consider the
various goals comprising the six factors as important reasons why they diversiﬁed, (2) the
mean level of importance assigned these goals by farmers and ranchers who consider
them somewhat, moderately, fairly and extremely important, (3) the mean level of
perceived achievement, and (4) a combined importance achievement score. An index is
calculated by multiplying the mean level of importance by the mean level of
achievement. The most important diversiﬁcation goals with the highest level of
perceived achievement have the highest index scores. This table also presents the factor
means of the level of importance and the perceived achievement which are means

weighted by the number of respondents who considered this goal important. In turn, these

149

two weighted means were multiplied to obtain an overall factor score reﬂecting the

importance and achievement of the goals included in each factor (factor weighted mean).

The table reveals that farmers and ranchers are accomplishing many of the
important goals that encouraged them to diversify. Interestingly the individual goals
with the highest importance-achievement scores are : (1) to keep the farm/ranch in the
family (8.88), (2) to continue farming/ranching (8.81), (3) to enhance the quality of life
(8.33) and, (4) to provide a new challenge (8.20). The table shows that the goals
comprising the Family Connection Factor (8.38), the Personal Aspiration and Pursuits
Factor (7.91) and Reducing Uncertainty and Risk F actor (7.3 8) have the highest
importance-achievement index scores. The Enhanced Financial Condition is the goal
factor that has the lowest importance-achievement score (6.73). Although important to
farmers and ranchers, two of the goals that comprise this factor --to enhance ability to
meet ﬁnancial/loan obligations and to reduce overall farm/ranch debt-- received low

perceived achievement assessments.

It appears ﬁ'om these results that farmers and ranchers who responded to this
study perceive farm diversiﬁcation as a very suitable strategy for keeping them in
farming and keeping the family connected to the farm or ranch. However, they are not as
positive concerning the contribution of diversiﬁcation to their overall ﬁnancial condition.
While diversiﬁcation is contributing to higher farm and ranch revenues and increased
market size, it is not generally suitable to reducing debt or increasing their ability to meet

ﬁnancial obligations.

150

Table 5.13 Importance-Achievement Index for the goals comprising the six
diversiﬁcation goal factors.

 

 

 

 

 

 

 

Farmers Im rtancel
Diversiﬁcation: Factors and Goals considering I Level Of Level 0' Achizvement
_ . mportanceAchIevement
(n-195) this goal (Mean) a b (Mean) a c Index
important (Mean)
Reduce Uncertainty and Risk (F 1)
Continue farming/ranching 105 3.67 2.40 8.81
Make farm less dependent on outside
factors 51 3.33 2.08 6.93
Offset ﬂuctuations in farm revenues 63 3.18 2.00 6.36
Reduce impacts of catastrophic
events 49 3_-3_1 L299 .6252
Factor Weighted Mean (3.42) (2.15) (7.38)
Grow and Service Markets (F2)
Provide current customers with new 60 3.12 2.28 7.11
products/sewices
Respond to a market need/opportunity 97 3.03 2.20 6.67
Increase/diversify the market 87 3.28 2.1 8 7.1 5
Generate revenues during off/non-
growing seasons 64 3'—3§ 240—5 9&3
Factor Weighted Mean (3.19) (2.18) (6.95)
Enhanced Financial Condition (F3)
Enhance ability to meet ﬁnancral/Ioan 57 3.68 1.93 7.10
obligations
Qualify for state/federal a53lstance 25 2.96 192
program
Reduce overall farm/ranch debt 51 m ﬂ Q3
Factor Weighted Mean (3.54) (1 .90) (6.73)
Personal Aspirations and Pursuits (F4)
Provide a new challenge 64 3.18 2.58 8.20
Interact with customers 74 3.30 2.41 7.95
Capitalize on an interest/hobby 76 3.00 2.34 7.02
Enhance quality of life 103 m _2_.QQ w
Factor Weighted Mean (3.31) (2.39) (7.91)
Revenue Enhancement (F5)
Generate additional income 163 3.37 2.12 7.14
Generate additional revenues from 99 M. M 1‘13
exrstlng resources
Factor Weighted Mean (3.29) (2.11) (6.95)
. Family Connection (F6)
Keep the farm/ranch in the family 96 3.73 2.38 8.88
Provide employment opportunities for
family members 41 L24- 223 L26
Factor Weighted Mean 43.58) (2.34) 18.38)

 

’ Only includes those participants that considered this goal at least somewhat important in their

diversiﬁcation decision-making process.

b Anchors: (1=Somewhat Important; 2=Moderately Important; 3=Fairly Important; 4=Very

Important).

” Anchors: (1 =Not Accomplished; 2=Partially Accomplished; 3=Completely Accomplished).

151

Significant Differences in the Accomplishment of Goals

This next component of the analysis was to determine whether and the degree to
which various diversiﬁcation goals have been accomplished differs depending on farm
and operator characteristics and the extent to which the farm is diversiﬁed. Two different
indicators of goal accomplishment were assessed. The ﬁrst indicator reﬂects the
percentage of diversiﬁcation goals that farmers and ranchers perceive have been
accomplished. The second indicator combines the importance and degree of perceived

accomplishment into a more robust and meaningful indicator.

First Indicator: Prgportion of Goals Accomplished

First, the different goals were coded 0: not accomplished and 1: accomplished.
Accomplished includes partially and completely accomplished goals. Since there are 20
goals the possible range for this indicator was ﬁ'om O to 20. Only farmers and ranchers
who considered a goal to be important are included in the analysis. Farmers and ranchers
are classiﬁed based on the proportion of diversiﬁcation goals that are accomplished: less
than two thirds of their diversiﬁcation goals accomplished, more than two thirds but not
all their goals accomplished, and farmers and ranchers who have at least partially
accomplished all their goals for diversiﬁcation. Table 5.14 shows that almost two thirds
(64.5%) of farmers and ranchers have accomplished all the diversiﬁcation goals that were
important reasons why they diversiﬁed. A relatively small percentage (12.7%) has

accomplished less than two thirds of the goals that inspired them to diversify.

152

Table 5.14 Proportion of diversiﬁcation goals accomplished segments].

 

 

Segments (n=197) Percentage of Respondents
Few goals accomplished (0 - 65%) 12.7
Most goals accomplished (66 — 99%) 22.8
All goals accomplished (100°/Q 64.5

 

1 Include partially or completely accomplished goals.

Analysis of variance and chi-square tests were then conducted to determine
whether different levels of goal achievement are associated with farmer and farm
characteristics and also the extent of diversiﬁcation. Characteristics tested include farm
acreage, farm gross sales, type of organization, farmers’ demographics, number of
generations of the farm in the farmer family, number of family employees, farmer’s
occupation and off-farm work condition, and extent of diversiﬁcation. None of these
variables are signiﬁcantly associated with the (3) levels of goal accomplishment (Table

5.15).

Second Indicator: Importance-Accomplishment Mean Score

The second indicator combines the importance of the diversiﬁcation goal and
degree of their perceived accomplishment. This importance-accomplishment score was
calculated by multiplying a goal importance score by an accomplishment score. A score
of 0 was assigned to diversiﬁcation goals that farmers and ranchers perceived they had
not yet accomplished. Goals partially accomplished received a score of l and goals
completely accomplished received a score of 5. The importance scores are: l for
somewhat important goals; 2 for moderately important goals; 3 for fairly important goals;

and 4 for very important goals. The importance-accomplishment scores for each goal

153

Table 5.15 Signiﬁcant differences in the proportion of goals accomplished by farm
characteristics, farmer proﬁle and extent of diversiﬁcation .

 

 

 

 

 

 

 

 

 

 

 

Few goals Most goals All goals
Variables accomplished accomplished accomplished Sig.
(12.7%)a (22.8%)” (64.5%)°

Farm Size (n=196) Not Sig.
Less than 50 acres 36.0% (14.5%) 40.0% (29.0%) 27.8% (56.5%)

50 - 149 28.0% (15.6%) 20.0% (20.0%) 23.0% (64.4%)
150 - 999 16.0% (12.1%) 15.6% (21.2%) 17.5% (66.7%)
1000 acres or more 20.0% (7.1%) 24.4% (19.6%) 31.7% (71.3%)

Annual Farm Gross Sales (n=192) Not Sig.
Less than $50,000 72.0% (17.8%) 56.7% (24.8%) 47.2% (57.4%)
$50,000 - $99,999 8.0% (7.7%) 11.4% (19.2%) 15.4% (73.1%)
$100,000 - $499,999 8.0% (4.4%) 20.5% (20.0%) 27.6% (75.6%)
$500,000 or more 12.0% (15.0%) 11.4% (25.0%) 9.8% (60.0%)

Type of Organization " (n=194) Not Sig.
Individual proprietorship 68.0% (14.0%) 64.4% (24.0%) 60.5% (62.0%)
Non-individual proprietorship 32.0% (11.0%) 35.6% (21.9%) 39.5% (67.1%)

Operator’s Level of Education (n=187) Not Sig.
At least some school 12.5% (14.3%) 16.3% (33.3%) 9.1% (52.4%)

At least some college 54.2% (12.5%) 55.8% (23.1%) 55.4% (64.4%)
At least some grad studies 33.3% (12.7%) 27.9% (19.0%) 35.5% (68.3%)

Operator’s Age (n=192) Not Sig.
Less than 45 years 12.0% (8.6%) 22.2% (28.6%) 18.0% (62.8%)

45 - 64 years 68.0% (13.5%) 66.7% (23.8%) 64.8% (62.7%)
65 years or older 20.0% (16.1%) 11.1% (16.1%) 17.2% (67.8%)

Number of Generations on the Farm (n=200) Not Sig.
First generation on the farm 72.0% (15.3%) 61.4% (22.9%) 59.3% (61.8%)

At least second generation 28.0% 49.5%) 38.6%423.0%) 40.7% (67.5%)

Number of Family Employees (n=187) Not Sig.

None 17.4% (11.4%) 19.0% (22.9%) 18.9% (65.7%)
One 13.0% (9.7%) 23.8% (32.3%) 14.8% (58.0%)
Two 34.8% (12.7%) 23.8% (15.9%) 36.9% (71.4%)

Three or more 34.8% (13.8%) 33.3% (24.1%) 29.5% (62.1%)

Operator’s Principal Occupation (n=194) Not Sig.
Farming or ranching 60.0% (12.7%) 62.2% (23.7%) 60.5% (63.6%)

Non farming or ranching 40.0% (13.2%) 37.8% (22.4%) 39.5% (64.4%)

Operator’s Off-farm Work (n=193) Not Sig.
Work off-farm 45.8% (13.1%) 42.2% (22.6%) 43.5% (64.3%)

Do not work off-farm 54.2% (11.9%) 57.8% (23.9%) 56.5% (64.2%)
Extent of Diversiﬁcation (n=194) Not Sig.

Lightly diversiﬁed
Moderately diversiﬁed 44.0% (12.5%)
Hi hly diversiﬁed 20.0% (8.7%)

36.0% (18.8%)

22.2% (20.8%) 23.4% (60.4%)
37.8% (19.3%) 48.4% (68.2%)
40.0% (31.0%) 28.2% (60.3%)

Include partially or completely accomplished goals.
8 Less than two-thirds of their diversiﬁcation goals were accomplished.
b Between 66% and 99% of their diversiﬁcation goals were accomplished.
° All their diversiﬁcation goals were accomplished.

154

could possibly have ranged ﬁom 0 (goal not accomplished) to 20 (very important goal
completely accomplished). The most important diversiﬁcation goals with the highest

level of perceived achievement have the highest index scores. Goals that are lower in
importance but high in achievement receive a higher index score than goals that more

important but not as high achievement. Then, the mean of all the importance-

accomplishment scores that each farmer could have was obtained.

Table 5.16 Importance-A ccomplishment score segments'.

 

Segments (n=201) Score Range Observed Range Observed Mean Percent

 

 

Less satisﬁed 0.00 - 1.99 0.37 — 1.93 1.29 14.9
Moderately satisﬁed 2.00 -— 4.99 2.00 — 4.95 3.19 34.8
Fairly satisﬁed 5.00 - 9.99 5.00 - 9.90 7.14 36.8
Highly satisﬁed 10.00 — 20.00 10.00 - 17.21 12.05 13.5

This is the mean of the scores calculated by multiplying the importance assigned to goals
(1=somewhat important; 2=moderately important; 3: fairly important; 4=very important) by the
perceived accomplishment (0=not accomplished; 1=partially accomplished; 5=completely
accomplished).

Farms and ranchers were divided into four categories based on their importance—
accomplishment mean scores (Table 5.16). The ﬁrst segment —less satisﬁed diversiﬁers—
include the 14.9% of the operators who had a mean score of less than 2, meaning that
they have not accomplished their goals or had partially accomplished goals that had a low
importance in their diversiﬁcation process. Moderately satisﬁed diversiﬁers with an
importance-accomplishment mean score of 2-5, represent about a third (34.8%) of
farmers and ranchers. This segment is composed of those farmers who perceive their
goals partially accomplished. Another third (36.8%) of farmers and ranchers, who were
classiﬁed as fairly satisﬁed diversifiers, has importance-accomplishment mean scores

ranging from 5-10. This group of farmers perceives their somewhat and moderately

155

Table 5.17 Signiﬁcant differences in the Importance-Accomplishment score segments
by farm characteristics, farmer proﬁle and extent of diversiﬁcation.

 

 

 

 

 

 

 

 

 

 

Less Moderately Fairly Very
Satisﬁed Satisﬁed Satisﬁed Satisﬁed
“"3”” (14.9%)8 (34.8%)b (36.8%)°( (13.5%)d 3’9
(Percent) (Percent) Percent) (Percent)

Farm Size (n=196) Not Sig.
Less than 50 acres 33.3(15.6) 40.6 (43.8) 28.8 (32.8) 18.5 (7.8)

50 --149 26.7(18.2) 14.5 (22.7) 27.4 (45.5) 22.2 (13.6)
150 - 999 13.3(11.5) 15.9 (31.4) 19.2 (40.0) 22.2 (17.1)
1000 acres or more 26.7(14.3) 29.0 (35.1 24.7 (32.1) 37.0 (17.9)

Annual Farm Gross Sales (n=192) Not Sig.
Less than $50,000 80.0(23.1) 52.2 (34.6) 47.9 (32.7) 41.7 (9.6)
$50,000 - $99,999 3.3 (4.0) 14.5 (40.0) 15.5 (44.0) 12.5 (12.0)
$100,000 - $499,999 10.0 (6.7) 23.2 (35.5) 25.4 (40.0) 33.3 (17.8)
$500,000 or more 6.7(10.0) 10.1 (35.0) 11.3 (40.0) 12.5 (15.0)

Type of Organization " (n=194) Not Sig.
Individual proprietorship 66.7(16.3) 63.8 (35.8) 56.9 (33.3) 69.2 (14.6)
Non-indiv. proprietorship 33mm 36.2 (33.8) 43.1 (41.9) 30.8 (10.8)

Operator's Level of Education (n=187) Not Sig.
At least some school 11.1(13.6) 11.6 (36.4) 12.9 (40.9) 8.0 (9.1)

At least some college 51 .9(13.3) 53.6 (35.2) 58.6 (39.0) 52.0 (12.4)
At least some grad. studies 37.0(15.6) 34.8 (37.5) 28.6 (31.3) 40.0 (15.6)

Operator’s Age (n=192) Not Sig.
Less than 45 years 13.3(11.1) 18.6 (36.1) 24.3 (47.2) 8.0 (5.6)

45 - 64 years 60.0( 14.2) 68.6 (37.8) 58.6 (32.3) 80.0 (15.7)
65 years or older 26.7(25.0) 12.9 (28.1) 17.1 (37.5) 12.0 (9.4)

Number of Generations on the Farm (n=200) Not Sig.
First generation on the farm 76.7(19.2) 63.2 (35.8) 51.4 (30.0) 66.7 (15.0)

At least second generation 23.3 (9.3) 36.8 (33.3) 48.6 (45.3) 33.3 (12.1)

Number of Family Employees (n=187) Not Sig.
None 14.8(11.4) 21.5 (40.0) 21.4 (42.9) 7.7 (5.7)

One 14.8(12.9) 16.9 (35.5) 18.6 (41.9) 11.5 (9.7)
Two 37.0(15.9) 30.8 (31.7) 34.3 (38.1) 34.6 (14.3)
Three or more 33.3(15.3) 30.8 (33.9) 25.7 (30.5) 46.2 (20.3)

Operator’s Principal Occupation (n=194) Not Sig.
Farming or ranching 56.7(14.3) 57.1 (33.6) 68.1 (41.2) 52.0 (10.9)

Non farminggor ranching 43.3(16.7) 42.9 (38.4) 31.9 (29.5) 48.0 (15.4)

Operator's Off-farm Work (n=193) x"=9.5, p=.023‘
Work off-farm 43.3(15.1) 52.9 (43.0) 30.6 (25.6) 58.3 (16.3)

Do not work off-farm 56.7(15.5) 47.1 (30.0) 69.4 (45.4) 41.7 (9.1)

 

.QOO’D

Importance-Accomplishment score lower than 2.
Importance-Accomplishment score between 2-5.
Importance-Accomplishment score between 5-10.
Importance—Accomplishment score between 10-20.
Pairwise comparisons show that the fairly satisﬁed diversiﬁers work signiﬁcantly less off-farm
than the moderately and very satisﬁed segments (x2=0.01 p=.006 and x2=0.02 p=.023).

156

important goals completely accomplished. The remaining 13.5% of farmers and ranchers
have importance-accomplishment index scores of 10 or higher. These operators are

identiﬁed as very satisﬁed diversiﬁers and their scores ranged ﬁ'om 10 to 20.

Statistical tests to determine whether diversiﬁcation goal accomplishment
segments are associated with farm(er)/ranch(er) characteristics and extent of
diversiﬁcation revealed statistically signiﬁcant associations with one characteristic.
Farmers that are more satisﬁed with diversiﬁcation are more likely to be employed off
the farm (Table 5.17). It is not evident why this might be the case except possibly that
non-farming related revenues often contribute to diversiﬁcation capacity (e. g.,

investment).

There is a statistically signiﬁcant relationship between the Importance-
Accomplishment score segments and the extent of diversiﬁcation. A linear regression of
the level of the importance/accomplishment score (dependent variable) on the number of
enterprises developed at the farm (independent variable) was performed. Table 5.18
shows that the more diversiﬁed the farm or ranch, the more accomplished their operators
are (F =6.74, p=.01). For each additional enterprise, the accomplishment perception

increases by almost one point (B=0.93).

Table 5.18 Linear regression of the level of the importance/accomplishment score
(dependent variable) on the number of enterprises developed at the farm
(independent variable).

 

RSquare Unstandardized FValue Sig.

Variables (RZL Coefﬁcient (B)

DV: Importance/Accomplishment score
lV: Number of enterprises developed (1 -8) .033 .93 6.74 p=.01

157

As expected, follow-up Chi-square Tests reveal that highly diversiﬁed farmers are
more likely to be more satisﬁed with diversiﬁcation than less diversiﬁed farmers
(12:12.9, p=.044) as shown in Table 5.19. Of course, it should be recognized that the
survey did not include farmers and ranchers who were once but not longer diversiﬁed
because they were not satisﬁed with the results of diversiﬁcation. However, the high
degree of satisfaction among currently diversiﬁed farmers/ranchers provides some

evidence of the success of diversiﬁcation.

Table 5.19 Chi-square between the extent of diversiﬁcation and Importance-
Accomplishment score segments.

 

 

Extent of Less Moderately Fairly Very
Diversiﬁcation Satisﬁed Satisﬁed Satisfied Satisfied Sig.
(14.9%) (34.8%) (36.8%) (13.6%)
Lightly Diversiﬁed 44.8% 21.8% 27.8% 11 .1 % f=12.9, p=.044'
Moderately Diversiﬁed 44.8% 44.9% 44.4% 44.4%
HighlLDiversiﬁed 10.4% 33.3% 27.8% 44.4%

 

Two-way comparisons show signiﬁcant differences between the less and moderately satisﬁed
segments (x2=7.88 p=.019) and the less and the very satisﬁed segments 08:11.63 p=.003).

5.4 An Objective Assessment of Diversification

The aggregate results from the previous analyses indicate that from a goal-
directed perspective diversiﬁcation is a satisfactory strategy in many ways. However,
there is also value of employing more objective measures of diversiﬁcation and
examining the relationship between goal-directed assessments and more objective
assessments. In addition to goal achievement the survey collected data on: (1) the effect

of diversiﬁcation on farm net revenues, (2) the percent increase in net revenues

158

attributable to diversiﬁcation, (3) whether and to what extend diversiﬁcation reduced

farm/ranch debt and (4) diversiﬁcation-related farm employment.

The operators of diversiﬁed Texas farms and ranches reported that revenues from
diversiﬁed enterprises represent a signiﬁcant share of their total farm/ranch revenues.
On average, diversiﬁers reported that diversiﬁed operations contribute over twenty
percent (21.5%) of their total revenues (Table 5.20). They also consider these revenues
as important for the continued operation of their farms (mean=2.9 in a four point Likert

type scale, anchored l as non important and 4 as important).

Table 5.20 The percentage of farm/ranch revenues derived from diversiﬁcation
enterprises and the relative importance of these revenues to the continued

 

 

 

 

operation of the farm/ranch.
Percent of Percent Of total Level of Importance1
' farmers revenues
Diversiﬁed Enterprises offering from these
these enterprises 1 2 3 4 Mean
ONOTPVISOS Range Mean
Recreation, Tourism &

Special Events (n=119) 60.8 0 - 100 36.0 5.7 11.4 23.8 59.0 3.4
Processing of Foods &

Beverages (n=29) 15.5 0 - 100 29.3 12.0 12.0 20.0 56.0 3.2
Leasing (n=24) 11.5 0 - 100 22.2 23.1 23.1 15.4 38.5 2.7
Lodging and

Accommodations (n=49) 23.0 0 - 100 20.1 10.8 18.9 13.5 56.8 3.2

Restaurants and
Food Services (n=13)
Other Agriculture Products
and Services (n=51)

7.8 0-50 16.9 18.2 9.1 27.3 45.5 3.0

24.4 0-50 12.6 35.3 17.6 26.5 20.6 2.3

 

Arts and Crafts (n=29) 16.1 0 - 40 7.9 24.0 32.0 16.0 28.0 2.5
Health and Cosmetics (n=10) 6.0 0 - 50 7.8 33.3 11.1 0.0 55.6 2.8
Educational Activities (n=57) 30.4 0 - 66 6.2 23.4 23.4 27.7 25.5 2.6

Total (weighted means) 21.5 2.9

 

1 Anchors: (1) not important; (2) somewhat important; (3) important; and (4) very important.

159

The enterprises that have greater impact on farm net revenues are recreation-
related enterprises and value-added through food and beverage processing. On average,
recreation enterprises contribute 36% of total farm and ranch revenues on the farms and
ranches that provide recreational opportunities. Similarly, value-added food and
beverage processing generates 29.3% of the farm revenues on farms that do this type of
processing. Even though other diversiﬁed enterprises generate a smaller percentage of
overall revenues, the operators generally consider these revenues important to the

sustainability of their farms and ranches.

Table 5.21 The percentage of diversiﬁed farmers reporting positive net revenues from
their diversiﬁed enterprises.

 

All enterprises All enterprises

 

generate positive operate Other ' Sig.
net revenues at a loss
Number of respondents 53 38 105
Percent of respondents 27.0 19.4 53.6
D'Vers'ﬁcat'm ”pmence 12.1 6.9 9.1 F=3.5, p=.032*

in years (mean)
f Tukey post-hoe yield signiﬁcant differences between those diversiﬁers that have all their
enterprises generating positive net revenues and those that have all enterprises operating at a
loss (p=.026).
" This includes those respondents that have some enterprises generating positive net revenues,
some operating at a loss or their enterprises are breaking even.

Over a quarter (27%) of the Texas diversiﬁed farms and ranches are generating
positive net revenues from all their various diversiﬁed enterprises (Table 5.21). About
twenty percent (19.4%) of the farmers/ranchers reported that all their diversiﬁed
enterprises are operating at a loss. However, it is important to consider other factors
including the number of years the enterprises have been operating. As a case in point,

ANOVA tests reveal a positive association between the time a farmer/rancher has

160

diversiﬁed and whether their diversiﬁed enterprises are generating positive net revenues.
Farmers that have all their diversiﬁed enterprises generating positive net revenues have
more years diversiﬁed (mean = 12.1 years) than those having all their enterprises
operating at a loss (mean = 9.1 years).

What was totally unexpected was that almost three quarters (73.0%) of diversiﬁed
farmers and ranchers are generating revenues from adaptive re-use of heritage resources
(Table 5.22). Even more surprising is that for almost half of these farmers the revenues
derived ﬁom the adaptive re-use exceed the restoration costs, and the majority produce
revenues that at least match the restoration costs. Adaptive re-use and restoration can

contribute positively to various intrinsic goals and also to farm net revenues.

Table 5.22 Contribution of adaptive re-use of heritage resources to farm/ranch

 

 

revenues.
Percentage (n=63)
Adaptive re-use is not generating revenues 27.0 "
Adaptive re-use is generating revenues 73.0
Revenues exceed the restoration costs 48.9 ”
Revenues matched the restoration costs 13.3
Revenues are smaller than the restoration costs 37.8

 

" Only include participating farmers and ranchers that are adaptively re-using the heritage
resources on their farms/ranches (n=91)

b Only includes farmers and ranchers who are generating net revenues for adaptive re-use
of heritage resources (n=46)

The survey results provide evidence that diversiﬁcation can have a positive
impact on the net farm/ranch net income. Over a third (37.6%) of the diversiﬁed
operators report signiﬁcant increases in net revenues after diversifying their operations

and the majority (69.1%) reported at least a slight increase (Table 5.23). Only 3.8% of

161

the respondents experienced reduced net revenues after diversiﬁcation. The average
increase in net revenues is 68.0% and the average decrease is 49.3%. The weighted
average impact is +45. 1 % meaning that on average all farmers and ranchers who
diversiﬁed their farms and ranches, including those that experienced reduced net income,

increased their net revenues by about half a percent.

Table 5.23 Effects of diversiﬁcation on the farm/ranch net income.

 

 

 

 

Effects on Farm/Ranch Net Income (n=181) Percentage

Types of Effects

Net income signiﬁcantly increased 37.6

Net income slightly increased 31.5

Net income did not change 27.1

Net income decreased 3.8
Extent of Change

Average increased (in percent) a 68.0

Average decreased (in percent) b 49.3
Overall Impact on Net Income

Weighed imact (in percent) +45.1°

 

" Includes net income variations reported by participants having an increase in their net
incomes (n=125)

b Includes net income variations reported by participants having a decrease in their net
income (n=7)

° (.691 x .680) - (.038 x .493) = .451 (45.1%)

There is a positive relationship between impact of diversiﬁcation on net farm
income and overall gross farm income and extent of diversiﬁcation. Diversiﬁcation had
a statistically greater impact on net farm income of farms with higher gross farm sales
(Table 5.24). More diversiﬁed farms and ranches are also likely to experience a larger
net increase in diversiﬁcation generated net farm income. There are no signiﬁcant
associations between the impact of diversiﬁcation on net income and the size of the farm,

the main occupation and diversiﬁcation experience of the farmer.

162

Table 5.24 Differences in the diversiﬁed farms and farmers among different effects of
diversiﬁcation on farm/ranch net income.

 

Net Income Net Income No Change

 

 

 

 

 

Net Income
Increased Increased In Net
Signiﬁcantly Slightly Income 073%” Signiﬁcance
(37.6%) (31 .5%) (27.1%) '

Farm Annual Gross Sales (n=177) .
Less than $50,000 35.8% 54.5% 71.4% 50.0% x2=18.9, p=.025
$50,000 - $99,999 20.9% 12.7% 6.2% 0.0%
$100,000 - $499,999 29.9% 25.5% 10.2% 33.3%
$500,000 or more 13.4% 7.3% 12.2% 16.7%

Farm Size (n=180)

Less than 50 acres 31.3% 28.1% 40.8% 28.6% Not Sig.
50 - 149 20.9% 24.6% 24.5% 28.6%
150 - 999 12.0% 19.2% 14.3% 28.6%
1000 acres or more 35.8% 28.1% 20.4% 14.2%

Farmer’s Main Occupation (n=179)

Farming or ranching 65.7% 56.1% 58.3% 57.1% Not Sig.
Non farming or ranching 34.3% 43.9% 41.7% 42.9%

Farmer’s diversiﬁcation experience (n=169)

Range (min. - max.) 0 - 31 1 - 40 0 - 58 2 - 5 Not Sig.
Mean (number of years) 10.3 9.6 8.6 3.3

Extent of Diversiﬁcation (n=177) ..
Range (min. — max.) 1 - 7 1 - 8 1 — 6 2 - 5 F=4.3, p=.006
Mean (number of

enterpriseg) 4.0 3.5 3.0 3.9

 

- Pairwise comparisons show that farmers that had a signiﬁcant increase in their net income after
diversifying have larger gross sales than those that did not experience any income effect after
.. diversiﬁcation (x2=16.4 p=.001).
Tukey Post-Hoc tests show that those farmers that evidenced a signiﬁcant increase in their net
income after diversifying their operations have more enterprises than those farmers that did not
evidence a change in their net income (signiﬁcant at 0.05 level).

The effect of diversiﬁcation on the farm debt, although also somewhat positive, is
mixed. About a quarter (25.9%) of diversiﬁed farmers and ranchers reduced their debt
after diversifying, but a majority (60.3%) reported no change (Table 5.25). Among
farmers and ranchers who reduced their debt, the average decrease is 34.2%. Conversely,
the average increase in debt among farmers who experienced an increase in debt after .
diversiﬁcation is 49.4%. Across all farmers the debt decreased an average of 2.4% aﬁer -

diversiﬁcation.

163

Table 5.25 Effects of diversiﬁcation on the farm/ranch debt.

 

 

 

 

Effects on FarmlRanch Debt (n=174) Percentage

Types of Effects

Debt decreased significantly 11.0

Debt decreased slightly 14.9

No change in debt 60.3

Debt increased 1 3.8
Extent of Change

Average debt decrease (in percent)‘ 34.2

Average debt increase (in percent) " 47.0
Overall Impact on Debt

-2. 4 °

Weighted impact (in percent)
hIncludes debt variations reported by participants having a decrease in their net income (n=45)
bIncludes debt variations reported by participants having an increase in their net income (n=24)
c(0.138 x .-470) (.259 x .342) - - 024 ( -.2 4%)

 

 

 

 

 

 

 

enterprises)

Table 5.26 Differences in the diversiﬁed farms and farmers among different effects of
diversiﬁcation on farm/ranch debt.
D Debt ed D Debt ed ChNO Debt
ecreas ecreas an e
Signiﬁcantly Slightly in Debt "22303;? 3'9"‘ﬁ°a"°°
(11 .0%) (14.9%) (60.3%) '

Farm Annual Gross Sales (n=171) .
Less than $50,000 36.8% 36.0% 64.4% 26.1% {=266, p=.002
$50,000 - $99,999 10.5% 16.0% 14.4% 8.7%
$100,000 - $499,999 31.6% 36.0% 15.4% 34.8%
$500,000 or more 21 .1 % 12.0% 5.8% 30.4%

Farm Size (n=173)

Less than 50 acres 36.8% 23.1% 36.5% 29.2% Not Sig.
50 - 149 15.8% 15.4% 26.9% 20.8%
150 - 999 5.3% 19.2% 17.4% 12.5%
1000 acres or more 42.1% 42.3% 19.2% 37.5%

Farmer’s Main Occupation (n=172)

Farming or ranching 57.9% 72.0% 56.7% 70.8% Not Sig.
Non farming or ranching 42.1% 28.0% 43.3% 29.2%

Farmer’s diversiﬁcation experience (n=163)

Range (min. — max.) 1 - 30 1 - 25 0 - 58 1 - 19 Not Sig.
Mean @umber of years» 13.6 8.5 9.3 6.9

Extent of Diversiﬁcation (n=170) ”
Range (min. — max.) 1 — 7 1 - 6 1 — 7 2 - 8 F=3.3, p=.022
Mean (”umbe' °f 3.9 3.9 3.2 4.0

jaimise comparisons show that farmers that did not change their debt levels after
diversiﬁcation have smaller gross sales than the other groups (signiﬁcant at 0. 05 level).
Tukey Post-Hoc tests did not yield any signiﬁcant difference between groups.

164

Once more, the farm size in terms of gross annual sales and the extent of
diversiﬁcation are the only variables associated with different levels of diversiﬁcation
impact on the farm debt. Comparisons between groups show that farmers that did not
change their debt levels after diversiﬁcation have smaller gross sales than the other
groups (Table 5.26). ANOVA tests show a signiﬁcant difference among the different
levels of diversiﬁcation impact on farm debt in regards to the number of diversiﬁed
enterprises developed (12:26.8, p=.002), although Tukey Post-Hoe tests did not yield any
signiﬁcant difference between groups. There are no signiﬁcant associations between the
impact of diversiﬁcation on net income and the size of the farm, the main occupation and

diversiﬁcation experience of the farmer.

Although diverting in some extent from the scope of this study, the impact of
diversiﬁcation on the farm labor was investigated. The labor impact was constructed
subtracting the estimated number of employees without engaging in diversiﬁed
operations from the actual number of employees in four categories (full time, part-time,

seasonal and year-round) by two categories (family and non-family members).

Table 5.27 shows that farm and ranch diversiﬁcation enterprises employ both
family and non-family members. On average, diversiﬁcation supports Six (6.4) jobs on
these farms and ranches. Clearly, adding diversiﬁcation enterprises provides the ability
to employ family members on the farm. In fact, often these enterprises are designed
around the special skills and talents of family members. On average diversiﬁcation
employs one family member. It is interesting to note that on some farms and ranches
diversiﬁcation actually results in a reduction in the number of persons employed and

costs. Value-added processing can often generate more revenues for less cost (e.g.,

165

employees) than traditional wholesale farming. Often, diversiﬁed farms and ranches
contract for products and services (e. g., jams, jellies, catering, and recreation programs)
that they sell. Shifting to pick-your-own and to recreation and tourism activities rather

than labor intensive farming can actually reduce the number of farm employees

Table 5.27 Impact of diversiﬁcation on the farm/ranch employment.

 

Types of Employges Percentage Number of Employees Supported by Diversiﬁcation

 

 

 

 

(0:175) 0f Farms Minimum Maximum Mean
. Family Employees

Full time year round 56.3% -2 5 0.3
Full time seasonal 9.9% -1 6 0.2
Part time year round 22.9% -2 7 0.2
Part time seasonal 23.4% -8 8 0.3
Total 81 .3% -8 9 0.9

Non-Family Employees
Full time year round 39.1% -2 53 1.5
Full time seasonal 19.3% -2 170 1 .8
Part time year round 26.6% -24 25 0.7
Part time seasonal 40.6% -1 40 1.6
Total 81.3% -2 161 5.6

All Employees

Full time year round 71.9% -4 58 1.8
Full time seasonal 24.0% -2 170 2.0
Part time year round 42.2% -24 25 0.9
Part time seasonal 47.4% -3 43 1.9
Total 97.4% -4 162 6.4

 

5.5 A Holistic Farm Diversification Assessment — Failure or Success

The next step in the analysis is to determine the degree of consistency
between farmer/rancher (subjective) assessments of the degree to which diversiﬁcation
has or has not accomplished various goals and more factual/objective measures of goal

achievement of these goals. Three different objective measures -net income changes,

166

debt changes and employment of family members— were compared with farmer and
rancher perceptions of accomplishment of related goals. For example, farmer/rancher
perceptions of the degree to which diversiﬁcation has achieved «not accomplished,
partially accomplished and completely accomplished -- their goal of enhancing income is
compared with actual impact on farm income and the actual change in net income that
they reported. The contribution of diversiﬁcation was also assessed for farmers and
ranchers who did not diversify to accomplish speciﬁc objectives. As a case in point,
about 21% of farmers did not diversify for the purpose of enhancing their income, yet
almost half (48.3%) of them increased their net income an average of 27% after

diversifying (Table 5.28).

Table 5.28 Objective effect of diversiﬁcation on income enhancement among different
levels of perceived outcome.

 

Enhancing Enhancing of

Enhancing Enhancing income was income wasa

income income was a

 

 

was not a goal but not a goal and 9°” alnd Sig.
goal accomplished partially total y
(20.9%) (12.2%) accomplished accomplished
(45.1%) (21.8%)
Impact on Farm Net Income (n=179)
Signiﬁcant increase 13.3% 9.5% 39.3% 67.5% x2=46.4, p<.001.
Slight increase 34.5% 23.8% 34.8% 25.0%
No change 51.7% 52.4% 21.3% 7.5%
Decrease 0.0% 14.3% 4.6% 0.0%
Extent of Farm Net Income Change (n=117)
23:31? '"C'eased 26.9 37.7 49.2 122.7 F=3.8, p=.012"
5:62:63 decreased n/a' n/a n/a nla

 

Pairwise comparisons show signiﬁcant differences between all groups except between farmers who
did not have income enhancement as a goal and those farmers who assessed this goal as not
.. accomplished (signiﬁcant at 0.05 level).
Tukey Post-Hoe tests yield signiﬁcant differences between the farmers who assessed this goal as
partially and completely accomplished signiﬁcant at 0.05 level).
" Too few cases to report.

167

The results show a high degree of consistency between perceived accomplishment
of various diversiﬁcation goals and objective measures of accomplishment. Two thirds
of the almost 22% of farmers and ranchers who diversiﬁed to increase income and
indicated that they had completely accomplished this goal reported signiﬁcant increases
in their net income because of diversiﬁcation (Table 5.28). Their net income increased
an average of about 123%. About three quarters of farmers/ranchers who indicated that
they had partially accomplished their objective of increasing their income reported an
increase (signiﬁcant or slight) in net income and they reported a 49% average increase in
net income. So there is a high degree of consistency between perceived and actual

accomplishment of the goal to increase income.

Table 5.29 Objective effect of diversiﬁcation on debt reduction among different
levels of perceived outcome.

 

 

Debt Debt . Debt
Debt reduction
Impact on Farm Debt 3:: :1: 2 reductsgtn was was partially $04133? Si
(n=173) goal accomplished accomplished accomplishbd g.
(76.1%) (6.1%) (15.0%) (2.8%)

Signiﬁcantly decreased 8.8% 9.1% 12.5% n/a" F=21.1, p=.012‘
Slightly decreased 11.2% 18.2% 31.3% nla

Did not change 68.0% 63.6% 37.4% nla

Increased 12.0% 9.1% 18.8% n/a

 

' Pairwise comparisons show signiﬁcant differences between those that debt reduction was not a goal
and those that were partially and totally accomplished regarding this goal (signiﬁcant at 0.05 level).
° Too few cases to report.

Three quarters of farmers and ranchers did not diversify to reduce their overall
debt (Table 5.29). However, 20% reduced their debt aﬁer diversifying. About 44% of
the 15% of farmers who had debt reduction as a goal and indicated that they had partially

accomplished this goal reduced their debt signiﬁcantly (12.5%) or slightly (31.3%). To

168

few farmers and ranchers (2.8%) indicated that they had completely accomplished their

goal of debt reduction, preventing additional analyses.

There was a statistically signiﬁcant relationship between perceived level of
accomplishment of the goal of creating jobs for family members and the number of full
time jobs created as a result of diversiﬁcation. Those farmers and ranchers who
perceived the highest level of accomplishment created the most number of jobs for family
members (Table 5.30). There was no statistical relationship with the number of part-time

positions created for family members.

Table 5.30 Average number of jobs created for family among different levels of
perceived outcome of diversiﬁcation to create position for family
members.

 

Creating .
jobs for Creating jobs Creating Jobs

for family for family Creating IObS

 

(n=1-,5) wasonagt a accomplished accomplished accggigaghed
(837%) (1 .9%) (10.8%) '
Full time - year round 0.2 -1.0 0.4 0.7 F=5.0, p=.002f
Full time - seasonal 0.1 0.0 0.6 0.1 F=2.8, p=.041
Part time - year round 0.1 0.0 0.3 0.4 Not Sig.
Part time - seasonal 0.3 0.0 0.4 0.4 Not Sig. ..
Total 0.6 -1.0 1.7 1.6 F=3.7,p=.013

 

Tukey Post Hoc test shows that those farmers who did not perceive this goal accomplished created
signiﬁcantly less jobs for their family than those that perceived this goal partially or totally
accomplished. It also showed that there are no signiﬁcant differences between the ﬁrst and second
segment and between those that perceived their goals accomplished (signiﬁcant at 0.05 level).
Tukey Post Hoc tests were signiﬁcant only between those farmers who did not have this goal and
those who assessed it as partially accomplished (p=.023 at 0.05 signiﬁcance level).

Tukey Post Hoc test did not yield any signiﬁcant differences between segments.

169

CHAPTER VI

SUMMARY AND CONCLUSIONS

Agriculture is an important economic activity in Texas, especially as an
employment source. About ﬁve percent of all Texas production of goods in 2004 came
from agriculture, corresponding to 10.10 billion dollars (Texas Comptroller of Public
Accounts, 2004). Farm and farm-related enterprises and organizations in 2001 employed
about ﬁfteen percent of the state’s population or 1,805,650 Texans (USDA: Economic

Research Service, 2004b).

The number of farms in Texas increased from 189,000 farms in 1975 to 229,000
in 2003 (USDA: National Agricultural Statistics Service, 2004b) while the average farm
size decreased from 610 acres in 1993 to 570 in 2003. This special situation is occurring
since medium sized farms are vanishing either because of their fragmentation into smaller
farms or because they are being incorporated into larger corporations that have a
intensiﬁed production model. This agricultural context is having a negative impact and

is posing economic and ﬁnancial challenges to small and medium farms/ranches.

Farmers and ranchers in Texas are having to become more entrepreneurial and are
developing different enterprises as a means of confronting a challenging agricultural
context (Wood, 2004). However, the results from the literature review revealed little in
the way of scientiﬁc information regarding the extent and characteristics of farm
diversiﬁcation in Texas. First, the types and combinations of enterprises farmers are
developing on their farms is not known. Second, information is inconclusive concerning

the economic and non-economic motivations and goals of farmers and ranchers who are

170

diversifying their farms and ranches. Third, and most important, it is not yet determined
whether, and to what extent, diversiﬁcation is effective at accomplishing both economic

and non-economic objectives of farmers and ranchers.

Previous studies have determined that a farmer or rancher’s decision to diversify
is based on complex set of goals, including both economic and non-economic goals
(McGehee and Kim, 2004; Getz and Carlsen, 2000). Past studies have veriﬁed the value
of diversiﬁcation including enabling the survival of the farm and making farms and
ranches more proﬁtable (N ilson, 2002; Sharpley 2002, Ventura and Milone, 2000).
However, no studies could be identiﬁed that assess the extent to which various
diversiﬁcation goals are accomplished, or the degree to which they are achieved. In

general there are very few studies of diversiﬁcation in the US. and none in Texas.

This study advances the knowledge of diversiﬁcation by assessing the
accomplishment of both economic and non-economic goals that farmers pursue through
diversiﬁcation. The following section summarizes the major ﬁndings from this study.
This is followed by a discussion of the implications and applications of the results, the

study’s limitations, and recommendations for future research.

6.1 Summary of Major Findings

The purpose of this study was to assess the success of agriculture diversiﬁcation
on a number of different dimensions. To do so, this study used a goal-directed behavior
model, based on the central actor role of farmers/ranchers in the diversiﬁcation decision-
making process. Success (of diversiﬁcation) was deﬁned as the satisfaction with the

extent to which diversiﬁcation has achieved various goals, both personal and extrinsic,

171

that initially motivated farmers to diversify their farms. Since there was a lack of
theoretical knowledge concerning agriculture diversiﬁcation in Texas, a preliminary stage
of this study included the validation of the agriculture diversiﬁcation model. The purpose
was to better understand the types and extent of diversiﬁcation that farmers are
developing as well as verify of the dynamic nature of this strategy. As presented in
ﬁgure 6.1, three objectives and nine research questions were developed and tested to

assess and better understand the success of agriculture diversiﬁcation.

 

 

Objective 1 _. What are the goals that drive and influence farm
divei'SIficatlon?

 

 

To assess the significance of
several types of goals that —. (SQ—2
farmers pursue when

diversifying, recognizing potential

How do diversifiers assess the importance of their
diversification goals?

 

Are there common factor patterns among the goals

 

 

 

 

significant differences in the :——p M.) 3 tested?
types of goals pursued based on '
farm and farmer werectsr'stm Does the significance of diversification goals differ
and extent 0f diverSiflcation. —> M) J within farm and farmer classes and diversification

 

 

 

" extent?

Objective 2 .. | To what extent are farmer/randier initial goals for
' " diversification being accomplished?

 

    
 

To evaluate farmers satisfaction
with the level of achievement of
various diversification goals,
identifying significant differences
in the “achievement satisfaction"
within segments of farms,
farmers and levels of 00 levels of goal accomplishment differ within farm
diversification. I classesJ farmers profiles and diversification extent?

I

To assess the actual level of
accomplishment of several M . Are the farmers' perceptions of success consistent
measurable diversification goals. - ‘ " with their actual achievements?

 

I,“ ,_ Are certain goals being achieved to a greater or lesser
' ' ' extent than other goals?

 

 

 

 

 

 

    

To what extent are the measurable diversification
- in“) r: . .
.goals being achieved?

 

 

 

 

 

 

 

 

Figure 6.1. Study Objectives and Research Questions

The Conceptual Model of Agriculture Diversiﬁcation

Texas farmers and ranchers are diversifying their revenues by integrating eight

different diversiﬁcation enterprises and activities: 1) value-added processing and

172

packaging (34.4%); 2) non-traditional crops, livestock and practices (68.9%); 3) new
marketing and distribution methods (88.2%); 4) recreation, tourism and hospitality
(64.6%); 5) historic preservation and adaptive re-use (42.9%); 6) leases, easements and
timeshares (13.2%); 7) contracts and services (6.1%); and 8) expertise, consulting and
education (31.1%). Almost three quarters (71.3%) of these farmers and ranchers are

involved in three or more categories of diversiﬁcation. The average is 3.5 categories.

The more diversiﬁed a farm or ranch, the more likely it is to be engaged in
various types of resource stewardship and environment-ﬁiendly agriculture practices. On
average, highly diversiﬁed farms employ more stewardship and environment-ﬁiendly
practices (5.8 practices) than lightly diversiﬁed farms (3.4 practices). Not surprisingly,
the more diversiﬁed a farm or ranch is, the lower the percentage of wholesale product

sales, and the greater the number of different marketing methods employed.

This study conﬁrms that diversiﬁcation is a dynamic process that stimulates and
supports additional diversiﬁcation. Over two thirds (69.9%) of the respondents phased in
their diversiﬁcation enterprises over time. Almost all (98.1%) started by growing crops
or raising livestock and started to diversify ﬁve years of starting farming. Almost half of
the diversiﬁed farms and ranches plan to further diversify by adding new enterprises,
most of them during the next three years. Interestingly, a relatively high percentage
(12.8%) anticipate diversifying additionally in three years or less by adding enterprises
not currently included in the diversiﬁcation model. More diversiﬁed farms are more
likely to continue to add new enterprises in their farms, while farms with larger annual

gross income ($500,000+) are less likely to continue diversiﬁcation.

173

Goals that Encourage Agriculture Diversiﬁcation

A broad range of goals, both ﬁnancial and non-fmancial, are important in farmer’s
decisions whether or not diversify. The majority of respondents diversiﬁed to generate
additional income (83.7%), to allow them to continue farming (53.4%), to enhance their
(family’s) quality of life (52.4 %) and to generate additional revenues from existing
resources (50.5%). The generation of additional income is the most important reason to
diversify (mean=3.8, on a ﬁve point Likert type scale with 1 being and not important and
5 being extremely important) 58. Three other reasons, all related to the perpetuation of
farming, were also very important: the continuance of farming and ranching
(mean=2.94), the enhancement of quality of life (mean=2.93) and keeping the farm/ranch
in the family (mean=2.78). Enhanced utilization of farm resources to generate additional
income is also an important reason encouraging farmers and ranchers to diversify
(mean=2.6).

Since multiple goals contributes to decisions to diversify farms and ranches, and
since goals have a hierarchical organization based on their importance, a principal
component factor analysis was performed on the importance ratings that farmers and
ranchers assigned to various diversiﬁcation goals to identify the underlying pattern of
relationships among the goals”. Six factors were identiﬁed. (1) Reduce Uncertainty
and Risk comprised of four goals related to the risk and insecurity inherent to farming

including: to offset ﬂuctuations in farm/ranch revenues; to reduce the impacts of

 

58 It was used a ﬁve-point Likert type scale that the following points: (1) not important; (2) somewhat
important; (3) moderately important; (4) fairly important; and (5) extremely important.

The factor analysis was performed using varimax rotation. A loading higher than 0.50 was the
threshold for including a goal as part of a factor. The factors identiﬁed had eigenvalues over 1.5 and
accounted for 60.9% of the variance. A loading higher than 0.50 was the threshold for including a goal
as part of a factor.

59

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catastrophic events; to make the farm less dependent on outside factors; and to continue
farming/ranching. (2) Grow and Service Markets comprised of goals that are associated
with retaining and expanding markets, such as providing current customers with new
products/ services; generating revenues during off/non growing seasons; responding to
market needs/opportunities and diversifying markets. (3) Enhanced Financial Condition
included goals associated with the ﬁnancial well being and performance of farm and
ranch businesses, such as enhancing the ability to meet ﬁnancial obligations, the
reduction of farm debt, and the ability to qualify for an assistance program. (4)
Individual Aspirations and Pursuits comprised goals that are personal in nature including
the capitalization on an interest/hobby, a new challenge, quality of life enhancement and
personal interaction with customers. (5) Revenues Enhancement included two important
goals: the generation of additional income derived, for example, ﬁom the additional
value added to the agriculture product and the maximum utilization of farm resources.
(6) Family Connections, the last factor, included two goals: diversifying to keep the farm

in the family and to generate employment for family members.

Accomplishment of Diversification Goals

Farmers and ranchers perceive that most (sixteen out of twenty) of their
diversiﬁcation goals have been accomplished. The goals that had the highest level of
accomplishment were to “Provide a new challenge” (mean=2.58), “To interact with
customers” (mean=2.41) and “To continue farming/ranching” (mean=2.40)6°.

Conversely, the goals with the lowest levels of accomplishment were to “Qualify for

 

(’0 In a three point Likert type scale, where l=not accomplished, 2=partially accomplished, 3=completely
accomplished.

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state/federal assistance programs” (mean=l .92), “Reduce impacts of catastrophic events”

(mean=1.90) and “Reduce overall farm/ranch debt” (mean=l .86).

Since the goal-directed behavior model recognizes a hierarchical organization of
individuals’ goals, a combined importance/achievement score was developed for each
factor. This score concurrently combined the importance of the goals comprising a

t“. The goals comprising the

certain factor and the perceived degree of accomplishmen
Family Connection Factor (8. 38), the Personal Aspiration and Pursuits Factor (7. 91)
and Reducing Uncertainty and Risk Factor (7.3 8) were among the most important and
most achieved. The Enhance Financial Condition Factor has the lowest importance-
achievement score (6.73). Although two of the goals that comprise this factor --to
enhance ability to meet ﬁnancial/loan obligations and to reduce overall farm/ranch debt--

are important to farmers and ranchers they received low perceived achievement

assessments.

Results indicate that current diversiﬁed farmers perceive farm as a very suitable
strategy for keeping them in farming and keeping family members connected to the farm
or ranch. However, they are not as positive concerning the contribution of diversiﬁcation
to their overall ﬁnancial condition. While diversiﬁcation contributes to higher farm and
ranch revenues and increased market size, it is not recognized their value in reducing debt

or increasing their ability to meet ﬁnancial obligations.

Two indicators of success were developed to determine whether different levels

of accomplishment were associated with different farm and operator characteristics and

 

6' This score was calculated by multiplying the mean level of importance by the mean level of achievement
for the goals that compose each factor, weighted by the number of respondents who considered these
goals important. The most important diversiﬁcation goals with the highest level of perceived
achievement have the highest index scores.

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the extent to which the farm/ranch is diversiﬁed62. One indicator reﬂected the percentage
of goals that farmers and ranchers perceive were accomplished after diversiﬁcation. No
statistically signiﬁcant associations were found between the percentage of diversiﬁcation
goals accomplished and farm acreage, farm gross sales, type of organization, farmers’
socio-economic characteristics, number of generations the farmer family has held the
farm, number of family employees, farmer’s occupation and off-farm work condition, or

extent of diversiﬁcation.

The other indicator combined the importance and degree of perceived
accomplishment of diversiﬁcation goals into a more robust and meaningful indicator
(importance-achievement score)“. This can also be viewed as an indicator of satisfaction.
Farmers and ranchers who are most satisﬁed with the results of diversiﬁcation are more
likely to be employed off the farm and tend to be more diversiﬁed. For each additional
diversiﬁcation category, the irnportance-perforrnance indicator increases by almost one
point (1.0). This result is very likely due to the positive complementarity of various
diversiﬁcation enterprises and that more enterprises contribute to critical mass and
broaden market appeal. In other words, the likelihood of perceived satisfaction increases
when farmers and ranchers add enterprises that increase and diversify their markets and

leverage and cross-market different enterprise lines.

 

62 Characteristics tested included farm acreage, farm gross sales, type of organization, farmers’
demographics, number of generations of the farm in the farmer family, number of family employees,
farmer’s occupation and off-farm work condition, and extent of diversiﬁcation.

This satisfaction score was calculated by multiplying a goal importance score (1=somewhat important;
2=moderately important; 3=fairly important; and 4=very important) by an accomplishment score (O=not
accomplished; 1=partially accomplished; 5=completely accomplished). The satisfaction score could
range from 0 to 20. The most important diversiﬁcation goals with the highest level of perceived
achievement have the highest index scores. Goals that are lower in importance but high in achievement
receive a higher index score than goals that more important but not as high achievement.

63

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Objective Indicators of Diversification Accomplishment

The ﬁndings indicate that diversiﬁcation contributes to increasing farm gross
revenues and proﬁts, reducing the amount of debt and increasing the number of farm
employees. First, operators of diversiﬁed Texas farms and ranches reported that revenues
from diversiﬁed enterprises represent a signiﬁcant share of their total farm/ranch gross
revenues. On average, diversiﬁed enterprises contribute over twenty percent (21.5) % of
the total farm revenues and operators consider this important in supporting the continued
operation of their farms and ranches. The enterprises that have greatest impact on farm
net revenues are those related to recreation, contributing on average 36% of total farm
and ranch revenues, and value-added food and beverage processing, contribute on
average 29.3% of the farm revenues. Farmers and ranchers even diversiﬁed enterprises
that generate a smaller percentage of overall revenues but are important to the

sustainability of their farms and ranches.

The results show that diversiﬁcation increased farm proﬁts (i.e., net revenues) of
the participating farms and ranches. Over a quarter of respondents (27.0%) reported that
all their diversiﬁed enterprises are proﬁtable. Over one third of the current diversiﬁers
(3 7.6%) had a signiﬁcant increase of their proﬁts after diversifying their operations and
the majority (69.1%) reported at least a slightly increase in proﬁts. On average,
diversiﬁed farmers in Texas increased their revenues by about half (45.1%) after
incorporating new enterprises into their agriculture ﬁrm. Farms that had a signiﬁcant
increase in their net income tend to be larger, in terms of annual gross sales, and they are

generally more highly diversiﬁed.

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Although farmers and ranchers generally perceive that diversiﬁcation does not
contribute signiﬁcantly to reducing farm debt, a quarter (25.9%) of them experienced at
least some decrease of farm debt after diversiﬁcation, but the majority (60.3%) reported
no changes. The average debt decrease was about a third (34.2%) while the average debt
increase was almost ﬁfty percent (49.4%), resulting in an overall debt decrease of 2.4%.
Farmers that did not experience any change in their debt levels generally have smaller

gross sales.

The ﬁndings also reveal that farm and ranch diversiﬁcation generates and support
jobs, suggesting a positive impact of diversiﬁcation on local communities. On average,
diversiﬁed operators estimate that diversiﬁcation supports more than six positions (6.4).
Diversiﬁcation also appears to be a good strategy to incorporate family members into the

business, supporting the employment of an average of one (0.9) family member.

A Holistic Assessment of Farm and Ranch Diversiﬁcation

There is a great deal of consistency between motivational and more objective
indicators of the outcome of diversiﬁcation. Three different objective measures -net
income changes, debt changes and employment of family members- were compared with
farmer and rancher perceptions of accomplishment of related goals, revealing a high
degree of consistency between perceived accomplishment of various diversiﬁcation goals

and objective measures of accomplishment.

First, there is a strong association between the degree that farmers and ranchers
perceive that their goal to increase farm income is accomplished and the actual increase

in net income attributed to diversiﬁcation. Farmers who diversiﬁed for the purpose of

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increasing their farm income and indicated that they had completely accomplished this
goal, reported signiﬁcant increases (+123% average increase) in their farm net income
because of diversiﬁcation. Farmers/ranchers who indicate that they had partially
accomplished their objective of increasing their income reported a +49% average

increase in net income.

There was also consistency in the perception of accomplishment regarding the
reduction of farm debt and the actual percent of debt reduction because of diversiﬁcation.
About 44% of farmers who had debt reduction as a diversiﬁcation goal and indicated that
they had partially accomplished this goal actually reduced their debt. There is also a
signiﬁcant relationship between perceived level of accomplishment of the goal of
creating jobs for family members and the number of full time jobs created as a result of
diversiﬁcation. Those farmers who perceived the highest level of accomplishment for

this goal created the most number of full time year round jobs for family members.

6.2 Implications and Applications of the Study Results

This study conﬁrms that farms and ranches with different characteristics are
diversifying to adjust and capitalize on changing market expectations and competitive
situations. The results suggest that diversiﬁcation is a feasible and suitable strategy for
different types of farms and ranches (e.g., small as well as large) and for a diversity of
operators with different characteristics (e.g., new entrants to farming or multigenerational
farmers). The ﬁndings also suggest that diversiﬁcation has certain advantages over other
farm adjustment strategies (e. g., intensiﬁcation) that require certain sine-qua-non

conditions to be applied, such as the large amounts of capital required for intensiﬁcation.

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The dynamic (i.e., extended plans for continued diversiﬁcation), ﬂexible (i.e., the
broad variety of potential diversiﬁcation enterprises) and integrative (i.e., the capacity
and beneﬁts to incorporate and leverage different types of enterprises) nature suggests
that diversiﬁcation is a strategy that can enable farmers and ranchers to respond to new
market opportunities and to adapt their farms to emerging agricultural contexts on
continued bases. Diversiﬁed farmers and ranchers that participated in this study appear
to be entrepreneurial in terms of the range of marketing methods and distribution
channels that they utilize to direct market their products, services and experiences. There
is also a beneﬁcial association between farmers’ need to diversify their revenues and the
needs and wants of various markets and the fact that more consumers are concurrently
demanding healthy food that is produced locally and environmental protection. The
increased emphasis on sustainable and community agriculture will only further enhance

the potential for greater farm and ranch diversiﬁcation.

Diversiﬁcation appeared as a strategy that simultaneously accomplished the
economic and non-economic goals of the participating diversiﬁed farmers and ranchers.
The multi-motivational dimension of diversiﬁcation decisions suggests that this strategy
should not be evaluated solely on its economic contribution but also for the non-
economic values that it provides farmers and local communities. Performance
assessments of diversiﬁcation —success or failure- must incorporate valid measures of the
accomplishment of a range of different goals that encourage farmers to diversify. It is
probably best to assess diversiﬁcation using and index of relevance (i.e., they correspond

to farmer/rancher goals) measures.

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The most important economic value that diversiﬁcation brings to farmers and
ranchers is the capacity to increase their revenues. It was conﬁrmed in this study that
diversiﬁcation contributes to increased farm gross revenues. Certainly, this is a positive
effect, especially during non-growing seasons, because it generates needed cash ﬂow to
pay continuing ﬁxed costs (e.g., mortgage, taxes, and equipment payments) associated
with farming and ranching. The study also conﬁrms that diversiﬁcation contributes to
enhanced net revenues. This has a major implication because it is the capacity to realize
proﬁts, not just increase revenues, that sustain farms and ranches over time. Often
traditional farming and ranching activities can produce increased revenues but the costs
(including capital requirements) often equal or exceed the additional revenues,

threatening the business survival.

Diversiﬁed farm and ranch businesses also beneﬁt from expanding their customer
base compared to traditional wholesale dependent operators by offering a more diverse
product line, utilizing a variety of direct marketing methods and through various farmer-
customer relationships. Although there are additional costs (e. g., labor, advertising,
distribution, packaging) associated with more direct marketing approaches, their great
advantage is that farmers and ranchers have the potential of increasing their percentage of
the price that ﬁnal products are sold for including the money that usually accrues other
actors comprised in long distribution chains. Diversiﬁcation can also help farmers and
ranchers produce more, and sometimes year-round revenues from farm resources
including buildings, equipment and staff. Results indicate that the extended and adaptive
re-use of various farm resources, such as old buildings or dated machinery, not only

increases the value of these assets but also generates additional net revenues. In some

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instances this leads to increased investment in environmental and cultural resource

stewardships.

The survey found a high degree of farmer and rancher satisfaction with
diversiﬁcation’s contribution to goals related to strengthening or maintaining the family
links to farming (e. g., keeping the farm in the family or continuing farming) and also
their goals related to individual aspirations (e.g., pursuing a challenge or gaining a closer
interaction with customers). Again, this suggests that non-economic values are important
driving forces in encouraging diversiﬁcation and are also instrumental in how farmers

and ranchers evaluate the success or failure of diversiﬁcation.

Although beyond its initial scope, the ﬁndings ﬁom this study indicates that
diversiﬁcation produces extemality that accrue to the broader community especially
communities where these farms are located. First, as mentioned above diversiﬁcation
encourages the stewardship of natural and cultural resources. Almost all diversiﬁed
farms surveyed are engaged in environment-friendly agiculture practices and perform
some kind of natural resources stewardship, including restoration of habitats and
propagation of native plants. More highly diversiﬁed farms or ranches are more likely to
be engaged in more of these practices. Second, diversiﬁcation is helping to preserve
farming and ranching heritage, including maintaining rural landscapes that contribute to
the quality of life in rural communities and also their ability to attract tourism and
tourists. The nearly ﬁfty percent of respondents that are preserving and restoring historic
and cultural elements on their farms and ranches, such as buildings, artifacts and even
heritage agricultural practices, are not only embellishing and augmenting the value of

their properties, but they are also helping maintain and make accessible regional and

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community heritage. The generation of jobs is certainly an important local impact. It
was reported that on average, diversiﬁcation creates more than six jobs that are most _
likely ﬁlled by local people. Finally, an emerging type of customer, more concerned with
locally produced foods, healthier food options and more environmentally aware, also

beneﬁts from a more direct relationship with the farmer.

As discussed in the introduction agriculture in Texas is conﬁonting signiﬁcant
challenges and change characterized by farmland division that is reducing the capacity of
farmers and ranchers to compete and generate sufﬁcient revenues to pay the increasing
costs of operating farms and ranches. This is threatening the existence of many small
farms and ranches and the communities that they created and sustain. This situation is
causing farm exodus, especially of young people and women, who look for more
proﬁtable occupational options outside agriculture. The fact that the range of values
associated with farm and ranch diversiﬁcation beneﬁt various actors involved in
agriculture (i.e., producers, consumers and local communities) should be recognized and
incorporated into various efforts to promote this strategy as a means to sustaining and

strengthening farming and ranching in Texas.

According to the results of this study, diversiﬁcation can help to strengthen Texas
farming and ranching, keeping existing farmers and farm household members in farming
and ranching, especially young generations of farming families and women.
Agripreneurs that responded to the survey are younger than the average farmers,
suggesting that younger farmers are interested in alternative ways to generate revenues
and diversiﬁed enterprises provide opportunities for them to capitalize on their non-

agriculture related skills and knowledge including value-added processing, recreation.

184

Similarly, there was evidence of a high involvement of women in Texas diversiﬁed
farms: almost a third of operators who participated in this study were women and the

majority of farmers’ spouses work on their farms.

Besides sustaining farm and ranch businesses and keeping farm families engaged
in farming, results show that diversiﬁcation is an avenue for new persons to enter
farming. Over half of diversiﬁed farmers are ﬁrst generation farmers. It appears that the
complex set of motivations that lay behind diversiﬁcation is attracting a group of people
that would not traditionally be related to agriculture, such as retirees from other
professions. Almost half (49.2%) of the diversiﬁed farmers and ranchers that are ﬁrst
generation farmers -new entrants to agriculture— are retired from another profession and

the majority (82.0%) don’t have any formal training in agriculture.

6.3 Study Limitations

There are three limitations related to the methods utilized in this study. The
major limitation of this study is related to the sample frame that was utilized. Since
neither the US. Department of Agriculture (USDA) nor the Texas Department of
Agriculture (TDA) had an inventory that accurately identiﬁed diversiﬁed farms in Texas,
it was necessary to develop a new sampling frame. A key word search of the lntemet
was used to identify the diversiﬁed farms and ranchers. This method most certainly over-
represented diversiﬁed farrns and ranchers involved in recreation/tourism and direct
marketing because they are more prone to have a web presence. This method also
under- represented diversiﬁed farms and ranchers that are small and have a high

percentage of loyal local clientele because they are less likely to be engaged in web-based

185

marketing. It is also possible that there are diversiﬁed farms and ranches that only or
primarily market on the web their predominant product (6. g. cattle) and not other
enterprises they may have been engaged in. Therefore, although the list of 638
diversiﬁed farmers and ranchers that was identiﬁed was an important product it is
questionable whether it represents the population of diversiﬁed farms and ranches in
Texas. Certainly there are more than 638 diversiﬁed farms and ranches in Texas.

Therefore, this study can not claim to be representative.

Another limitation was the number of survey respondents which effectively
limited the range of statistical analyses that could be performed. For example, cluster
analysis could have been utilized to group/segment farmers and ranchers based on their
Goal Factors scores. However, the relatively few number of survey responses prevented
the use of cluster analysis. This also prevented the use of other segmentation

bases/variables including geography and types of diversiﬁcation enterprises.

Although the Texas Agriculture Diversiﬁcation Survey gathered enormous
amounts of information on diversiﬁed farms and ranches and their operators, more
speciﬁc information is needed to better understand the economic beneﬁts of
diversiﬁcation. Besides diversiﬁcation produced revenues, proﬁts and debt reduction, it
would have been interesting and useful to collect speciﬁc information on both pre and
post diversiﬁcation net income and debt as well as other objective indicators of values
gained with diversiﬁcation, such as impact on farm value, their customer base, and

marketing and distribution networks.

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6.4 Recommendations

Recommendations ﬁom this study deal with the implementation of farm and
ranch diversiﬁcation in the applied world (i.e., extension/agencies dimension) and for

further research (i.e., academic dimension).

This study provides evidence that diversiﬁcation is one way that farmers can
attain both economic and non-economic goals. It is a value(s)-added strategy in that
different beneﬁts ﬂow to farmers and ranchers, to nearby communities, and also to the
customers who consume and experience the products and services that these farmers and
ranchers produce. Agriculture also beneﬁts from the perspective that diversiﬁcation
helps build direct and lasting relationships with non-traditional agricultural stakeholders
who visit farms and ranches and buy directly. The results of this research suggest various

changes in programs and policy to enhance the success of diversiﬁcation.

First university extension programs should continue to develop and implement
educational and technical assistance programs designed to assist farmers and ranchers: I)
understand the potential of diversiﬁcation; 2) evaluate the ﬁt and feasibility of alternative
diversiﬁcation enterprises; and 3) understand the intricacies of managing and marketing
these enterprises. Agricultural agencies should cooperate with universities to identify and
construct case studies of diversiﬁcation successes and failures and make them available

to farmers and ranchers.

While agricultural agencies have demonstrated interest in diversiﬁcation,
relatively few States have aggressively encouraged diversiﬁcation through integrated
policies, incentives, and educational programs. It would be beneﬁcial for State

agricultural agencies to identify and encourage programs that will support various types

187

of diversiﬁcation such as AgriTourism and value-added processing. Also, current
agricultural incentives should be objectively assessed to determine if, and how, they
could be modiﬁed to encourage greater diversiﬁcation. For example, a number of
European countries are redirecting traditional agricultural support programs to encourage

AgriTourism and other types of diversiﬁcation entrepreneurship.

The rational and beneﬁts for programs and policies encouraging and promoting
diversiﬁcation are described in various policies. The primary purpose and focus of the
Small Farms Policy (September 1999) is to promote and encourage diversity in food,
ﬁber and wood productions, to create opportunities to connect farmers with consumers
and to support agricultural systems that sustain and strengthen rural communities, cultural
diversity, and a traditional way of life. Speciﬁcally, this policy mandates the
development and support of research, regulations and outreach programs and initiatives
that focus on the special needs of small farms for developing alternative enterprises,

value added products, and collaborative marketing efforts.

Similarly the current Farm Bill (Farm Security and Rural Investment Act of 2002,
Public Law 107-171, May 2002) encourages various types of farm and ranch diversiﬁed
enterprises through the creation of a series of economic incentives (e.g., payments,
grants, loans). For example, it creates payments to promote agricultural production and
environmental quality as compatible goals; mandates the farmland protection program to
purchase conservation easements in eligible land that is subject to a pending offer to limit
their nonagricultural uses; strengthens the seniors farmers' market nutrition program to
increase the consumption and production of healthier products; and creates a program for

restoring historic barns that can trigger diversiﬁcation through historic preservation and

188

adaptive re-use. Interestingly, the Farm Bill fosters what can be a more frequent type of
diversiﬁcation in the ﬁrture, creating grants to assist in paying the cost of development
and construction of bioreﬁneries to demonstrate the commercial viability for converting
biomass to fuels or chemicals. It also focuses on incentives promoting economic
diversiﬁcation and marketing opportunities for the value-added agricultural product that
may have an impact on creation of wealth and job opportunities in rural areas. Farm and
ranch diversiﬁcation also beneﬁts from this bill since high-priority research is mandated

focusing on Agrotourism and agricultural marketing.

Federal policies fostering diversiﬁcation (i.e., Small Farms Policy and Farm Bill),
are programmatic in nature and require supportive State regulations and programs to be
effective. Therefore, compliance of these policies requires the creation of State
regulations to channel the funds created to their beneﬁciaries. It also requires the
development and strengthening of programs that 1) transfer technical —information and
expertise- assistance to farmers regarding farm and ranch diversiﬁcation; 2) provides
ﬁnancial assistance (e.g., soft loans, tax relief) to those developing or expanding
diversiﬁed enterprises; 3) reduces regulatory barriers for the diversiﬁed
products/services. An example would be the Texas Department of Agriculture (TDA),
the Natural Resource Conservation Service (N RCS) and Texas Cooperative Extension
(TCE) partnerships to provide technical assistance, educational programs and applied
research results to rural entrepreneurs for two years in topics related to marketing,
ﬁnancial, risk management and marketing considerations of farm and ranch
diversiﬁcation. States also need to expand their ﬁnancial assistance programs from their

current focus on the alleviation of marketing costs (e.g., matching funds for promotion of

189

diversiﬁed products) to other areas like mitigation of investments costs for creating or
expanding diversiﬁed operations (e.g., soft loans or tax relief to preserve historic
buildings for adaptive re-use or to acquire machinery for value-added processing).
Finally, it is recommended that States evaluate and eliminate excessive regulatory
barriers such as new laws that reduce the selling and shipping restrictions related to wine

sales in Texas.

Given the limitations encountered in this study regarding the sample frame, it is
suggested that the USDA as well as state agricultural agencies 3 (e.g., Texas Department
of Agriculture) invest in the development of an inventory of diversiﬁed farms and
ranches. This inventory will be an essential ﬁrst step in monitoring of this strategy and
also will enable a continued two-way communication between diversiﬁed farmers and
agriculture agencies that will help to identify new trends and needs regarding farm
diversiﬁcation. Data needed for this study could be developed by the addition of few

questions in the Agriculture Census.

The fact that farmers and ranchers diversify to achieve a variety of economic and
non-economic goals coupled with the fact that diversiﬁcation produces beneﬁts to
farmers and ranchers, communities and consumers, suggests that efforts to encourage and
enhance the values of diversiﬁcation should be a partnership between various
agricultural, economic development, cultural and tourism agencies and organizations.
For example, combined action ﬁom agriculture interests and cultural/arts related
institutions for the promotion and/or implementation of the preservation and adaptive re-

use of heritage on farms would be worthwhile.

190

This study also reveals that there is a need and potential for a variety of further
diversiﬁcation research. One recommendation for future research is the need to monitor
agriculture diversiﬁcation on a continued basis by collecting diversiﬁcation relevant
information as part of on-going surveys and information collection efforts conducted by
federal and state agencies. Diversiﬁcation is a dynamic strategy and diversiﬁed farmers
and ranchers are constantly incorporating new enterprises to better respond to their
customers; it can also be inferred that other enterprises are being abandoned. A focus of
future research should be the identiﬁcation new diversiﬁcation enterprises that become

less common.

Future studies concerning farm diversiﬁcation need larger and more diverse
samples to facilitate the design and application of statistical methods that help to enhance
the understanding of the outcome of the diversiﬁcation strategy. As previously stated,
cluster analysis based on the motivations for diversiﬁcation will help researchers better

understand the different proﬁles of agripreneurs.

This study conﬁrms previous ﬁndings regarding the active role of women in
diversiﬁcation. However, more detailed information on the role of women is needed,
especially in understanding the types of activities in which they are involved, the extent
to which they participate in managerial roles, and the degree to which they assume
responsibility for both farm and farm household tasks. Another important topic that
needs ﬁirther exploration is the process of insertion of women in the farm business, that
is, the process of farm succession from a traditional father-son model to a father-daughter

model, inquiring whether diversiﬁcation is the cause or the effect of this new type of farm

19]

succession. Another interesting area of research would be the number and characteristics

of women entering farming and ranching as diversiﬁed entrepreneurs.

Farm and ranch diversiﬁcation through the preservation and adaptive re-use of
historical and cultural heritage was an unexpected, but very exciting ﬁnding. While it
was anticipated that some farmers and ranchers were involved in cultural resource
preservation, the fact that almost half are preserving agriculture heritage was not
expected. More surprising was the high proportion of the farmers involved in
preservation and adaptive re-use of heritage that were realizing net income as a result.
These ﬁndings stand by themselves and urge further research to identify the types,
motivations, and values associated with this type of farm diversiﬁcation. It also reveals
the potential connection between Agritourism and cultural tourism. Also, there may be
beneﬁt in encouraging farmers and ranchers to take greater advantage of various federal,
state and local ﬁnancial incentives and programs designed to encourage historic

preservation.

Farm diversiﬁcation did not appear in this study as a viable strategy to alleviate
debt. Debt reduction was the goal with least degree of accomplishment, with over a
quarter, 25.5%, of those having this goal reporting not having accomplished it at all.
Moreover, 13.8% of respondents had an after diversiﬁcation average debt increase of
almost 50%. In some cases farmers and ranchers may take on additional debt to ﬁnance
the capital improvements related to a diversiﬁcation enterprise, but the result is that their
revenues and net income increases. This study also found that other factors, such as the

retum on the investment of time, inﬂuenced the assessment of debt impact. It is

192

recommended that more detailed attention be given in future research to better understand

the impact of diversiﬁcation on farm and ranch debt.

A ﬁnal recommendation for future research is to identify and better understand
the factors that limit and impede the success of various types of diversiﬁcation
enterprises. This research shows that not all diversiﬁcation ventures are successful. The
sampling frame for this survey were farms and ranches currently operating various types
enterprises and did not include ones that failed and were out of business. A research
effort that both continuously identiﬁes and monitors diversiﬁed farms and ranches and
does follow-up investigations of failed enterprises would be valuable and could help
develop a “what-not-to do” inventory. This research could also help in developing

parameters for assessing the feasibility of proposed diversiﬁcation enterprises.

193

BIBLIOGRAPHY

Alsos, G.A.; Ljunggren, E., and Pettersen, LT. 2003. Farm-Based Entrepreneurs: What
Triggers the Start-Up of New Business Activities? Journal of Small Business and
Enterprise Development, 10(4):435-443

Altieri, Miguel. 2000. Ecological Impacts of Industrial Agriculture and the Possibilities
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196

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Sustaining Rural Economies and Lifestyles Conference, Amarillo, Texas; May 5-
6

198

APPENDIX A

TEXAS AGRICULTURE DIVERSIFICATION SURVEY HOME PAGE

Agriculture Diversification ~ Survey 7005'

.0... m 'M’V‘wau-la

Susan Combs Survey Support Letter 1 Print Survey I (:nnfirlrrritiality (Hinton! ll‘.

 

Instructions
WI:

The Farm and Ranch Diversiﬁcation Survey gathers information about farms and ranches that have
developed several enterprises on their farm/ranch, offering several products and services to the
public and other farmers/ranchers (e 9, processing of foods, tours, on-fenn direct sa l.es)

W

Answering the survey on-line is actually very easy and converiientl For some questions all you will
have to do is to click on the appropriate response category, for example 'Ves' or ‘m'. We have
made it easy to answer some questions by prowding 'drqo down boxes' that show a number of
different potential answers such as the state where your farm or ranch is located. For other
questions all you have to do is type a short response In the mpropriate space.

In addition, the Farm and Ranch Diversiﬁcation Survey is tailored to your unique farm/ranch
characteristics based on your responses. For example, Section III will ask you about the
products/sewices that you produce/offer according to the production categories that you selected in
section ll. This customized system is very convenient because you do not need to go through
questions that are not applicable to your farm or ranch. However, to properly tailor the survey to
your characteristics, we need you to carefully read the survey questions and that you select the
option(s) that better ﬁts to your busrness.

You can complete the survey entirely during one on-line session going to:
W., __“_ . .. -. .. __. . .

Or you can re-enter the survey at any time to complete re «raininga sections login with the email

address and the zip code that you provaded at the time you registers
m aMml

It will take you between 10 and 20 minutes to complete the survey, depending on the extent of your
farm/ranch diversiﬁcation. It is m that after completing each section of the survey you click on
the 'Submlt“ button located at the end of the page. If you are somehow interrupted before pressing
the 'Submit' button your responses to your questions WI" not be saved or sent to us.

You can also print the survey before you go on— line to answer it. However, the printed version of the
survey is not customized to your farm or ranch, so you will notice that it is conSIderably larger
compared to what you will need to complete on- line. To print the survey, please click on the 'Print
Survey' link at the top of the page

It is important to remember that although you will be completing this survey in 2005, we are asking
for Please answer the questions for 2004, not what you expect or
plan to do in 2005.

W
To access The Farm and Ranch Diversiﬁcation Survey you need to register ﬁrst. After you have

registered you can login to the survey at any time, providing the email address and the 2ipcode that
you provided at the time you registered.

 

33mm: If thls ls your ﬁrst tlme “accessing the survey, please dlok below:
http: // , . : ""'

 

 

 

 

 

Login: If you have already raglsterad for the survey, please clluk below:
http: // ’log' .html

 

 

 

 

199

APPENDIX B

SURVEY REGISTRATION PAGE

cation ,. Survey 2005

' e‘“ ,r .

 

{Registration Tage

 

Please enter the following information of your Farm or Ranch

 

 

E-mail address (W): l

 

 

Name of your farm/ranch:

 

 

Webpage address: I

 

State‘ ..‘_§9_lEE§f_SEiEE._T_f’_,

Zipcode: (regulred): l

 

 

 

Owner/operator‘s last name:

 

 

 

Owner/operator's ﬁrst name:

 

 

 

 

 

 

 

200

APPENDIX C

SURVEY LOGIN PAGE

Agriculture Diversification -~ Survey '2

4 -‘ ‘ )4
z ’ \ ~a-; .1,»
. “5539’ n. .
- ,
I

W .

 

Login Q’age

 

Please enter your email and zipcode to access
The Agriculture Diversiﬁcation — Survey 2005

 

 

E-mall address I

lecode: I

 

 

 

 

 

‘Qlll‘, "ll"

 

 

 

201

APPENDIX D

SURVEY SECTIONS INDEX PAGE

 

Sections I Mex

 

The table below shows the sections that you have already completed in
black and those that you have not completed In red.

To continue the survey did< on the E1331 section that you
have not yet completed.

 

 

 

    
     

 

 

 

 

 

 

Section 1: information About Your Farm/Ranch Not Completed

Section 11: what You Do to Generate Farm/Ranch Revenues Not Completed
3: .'

Section iii: Farm/Ranch Products and Services Not Completed
i: ‘. ............... t

Section N: sales and Different Revenues Not Completed

Section V: Diversification Goals and Objectives Not Completed
‘r ‘r‘ .

Section Vi: Assessment of Your Diversiﬁcation Goals Not Completed

Section Vii: Financing, Marketing and Management information - Not Completed

Section vm: Characteristics of the Farm/Ranch Operator Not Completed

 

 

 

 

 

 

202

APPENDIX E

SURVEY SECTIONS

Agriculture Diversification— Survey 2005

 

 

P

Section I

Itgfomation ﬂ 6011i Your Tarm/Rmcﬁ

1. How far is your farm or ranch from/off a paved hiymay and from the following urban
areas?

 

Distance from/off a paved highway:

 

 

 

Distance from an Urban Cluster (UC):
[An Urban Cluster is an area that has a
population of 2,500 to 49,999.]

 

 

 

[An Urbanized Area IS an area that has a
population of at least 513.000.]

 

Distance from an Urbanized Area (UA):

 

L: 59199 - .
i - Select - v

 

:56'9,C‘:._. .. ,_ ‘.'

 

What is the total era-Iago of your farm or ranch? Please, respond with numbers only. Do
not insert commas when answering the questions. Round to the nearest a

 

Total acreage of your farm/ranch. include only acres that mm. ”NH—“w“:

5 acres

 

for farmung or ranching in 2004.

 

Number of acres of your farm/ranch that you rented or leased mm

.. ,, ... . ....._._ ..

 

 

 

How many acres did you farm or ranch in 2004? Please, respond with numbers only. Do
not insert commas when answering the questions. Round to the nearesta

 

 

Number of acres that 1922510 that you farmed or ranched in 2004. VW_V_: acres
Number of acres of land that you rented or leased mug; and you

farmed and ranched in 2004. "—“‘“‘ "‘_

Do not include land used on a per-head or animal unit month basis under 3 »~' acres

grazing permit

 

Number of acres of land that you farmed or ranched In 2004 under a

 

grazing permit on a per-head

 

 

 

 

 

 

 

. Do you raise or produce agriculture products (e.g., crops, livestock, ﬁsh in captivity,
woodlot) for commercial sale?

0 Yes O No

. Which of the following best describes your current farm/ranch organization?

 

0 individual or family operation (sole proprietorship)

 

O Partnership (including family partnerships)

 

CI incorporated under state law

 

 

0 Limited Liability Company (LLC)

 

O Other. Please speCify:

 

 

6. How did you and/or your family start this farm/ranch business?

 

O Purchased the land and started the farm/ranch

 

A Purchased it as an already existing farm/ranch

 

V
O inherited an existing farm/ranch

 

O Inherited the land and started the farm/ranch

 

O Other. Please specify:

 

 

7. How many generations has the farm/ranch been in your family?

 

 

We are ﬁrst generation farmers/ranchers

 

K‘:
V
O 2 Generations

 

O 3 Generations

 

O 4 Generations or more

 

 

. come farmers/ranchers exped to keep their farm/ranch in the family. is it your
expectation to pass your farm/ranch to your children or grandchildren?

0 ves O No

 

204

 

 

 

 

 

9. Which of the agriculture methods do you currently practice on your farm/ranch? Please

check all that anniv.

 

[:l Crop rotation

 

D Organic/natural growing/raising (e.g., grass fed)

 

[:l Farm/ranch waste management (e.g., composting)

 

[:1 No additives (e.g., pesticides/hormone free)

 

D Certiﬁed organic

 

D Integrated pest management (1PM)

 

D Biological control

 

El None of the above

 

 

D Other 1. Please specify:

 

 

C] Other 2. Please specify: i i

 

 

 

 

10. Which of the following stewardship methods do you currently pradlce on your

1 .

u

farm/ranch? Please check all that apply.

 

Cl Soil conservation

 

1:] Water conservation

 

D Protect, propagate and encourage native plants

 

E} Wildlife habitat improvement

 

C] Fisheries habitat improvement

 

[:1 None of the above

 

 

D Other 1. Please specify: E 5

 

 

 

 

1:] Other 2. Please specify: l

 

 

Have you preserved or restored any heritage/cultural building, equipment, artifact or
other objects on your farm or ranch?

 

O No. Please, go to the end of the section and click the 'Submit' button.

 

What have you preserved? check all that apply.
C] Building (e.g., barn, mill, centennial farm house)
E] Equipment (e.g., tractor, tools, oil rigs, windmills)
[:1 Artifact (e.g., Indian ceramics, fossils)

D Other Please specify:

 

 

 

0 Yes Why have you preserved such heritage/cultural objects?
Check all that apply.

[I These objects are important to me and my family

C] Their intrin5ic value

1:] Their potential to generate revenues

C] Cost savings for using the structure(s) for other purposes

 

 

 

C] Other. Please specify:

 

 

 

 

205

 

12. Have you adaptively re-used the heritage ob]ect(s) that you have preserved or restored

13.

on your farm or ranch? For example, conversion of a historic born into a dance room, use
of antique tractor for wagon rides, exhibits of artifacts.

O No. Please. go to the end of the section and click the 'Submit' button.

0 Yes

is this adaptive re-use generating revenues?

 

O No. Please. go to the end of the section and click the 'Submit' button.

 

indicate the levels of the revenues generated compared to the restoration
costs:

0 Yes 0 Revenues exceeded the restoration costs
0 Revenues have matched the restoration costs
0 Revenues are smaller than the restoration costs

 

 

 

Section I]
‘i-rix’liat Q’bu (230 T 0 generate Tam/(Rand Revenues

Which of the following did you grow, raise, produce or offer on your farm/ranch during
2004 for the purpose of generating revenues? Please, check all that apply.

 

 

D Crops (e.g., grains, nursery, herbs, grapevines)

 

Cl Livestock and Other Animals (e.g., cattle, emus, mink, apianes. fish)

 

D Other Agriculture Products and Services
(e.g., eggs, meats, wool, woodlots, feedlots, animal training)

 

C] Processing of Foods and Beverages (e.g., Wine, cheese, dried herbs, baked goods)

 

D Recreation, Tourism and Special Events
(e.g., tours, pick-your-own, corn maze, horse riding, hunting, weddings, festivals)

 

C] Lodging and Accommodations (e.g., B&B, cottages)

 

C] Restaurants and Food Services (e.g., dairy store, catering, deli)

 

[3 Health and Cosmetics (e.g., soaps, spas)

 

[:1 Arts and Crafts (e.g., dried flowers, photography. candies)

 

D Educational Activities (e.g., workshops, seminars, horse clinics)

 

[:1 Leasing (e.g., land, equipment)

 

Cl Easements (e.g., conservation easements)

 

C] Time Shares

 

 

D Other Products and Services (e.g., contracting, composting, recycling)

 

 

206

 

 

Section III
Tam/dime}? Q’rozfucts MServices

1. Which of the following did you grew, raise, produce or offer on your farm/ranch during
2004 for the purpose of generating revenues? Please, check all that apply.

the different products/services that appear in the tabie(s) below are based on the
responses that you provided in Section 11.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crops I,
C] Grains (e.g., wheat, sorghum) [:1 Fruit, nut or citrus trees
[I Corn C] Grapevmes
C] Soybeans Cl Tobacco
D Dry beans, rice or potatoes [3 Vegetables and/or melons ﬁeld grown
D Vegetable seeds or plants under protection I] Vegetables under protection
C] Bemes (e.g., raspbemes, strawberries) [3 Herbs (medicinal and culinary)
C] Hay or haylage C] Nursery (include shrubs)
E] Bulbs, ﬂowers or ﬂower seeds U Mushrooms
C] Sod D Maple sap/syrup
D Pumpkins or gourds D Native, heirloom or endangered plants
E] Christmas trees
C] Other 1. Please speafy:
D Other 2. Please specxfy: 7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Livestock and other Animals
C] Cattle D Horses. ponies or other equine
[3 Sheep or lamb C] Hogs or pigs
C] Goats D Buffalo or bison
[:1 Deer or elk D Emus or ostnches
D lJamas and/or alpacas Cl Chickens or other poultry
CI Mink or rabbits U Fish or shellﬁsh in captivity
D Apiaries I] Miniature animals
[:1 Other 1. Please specify: 44 > h‘
D Other 2. Please specify: ‘ »

 

 

 

 

 

207

 

 

 

other Agriculture Products and Services

 

[:1 Milk

I] Feedlots

 

1:] Eggs

D Other cattle products (e.g., semen)

 

E] Fresh meats

C] Rental stalls for horses

 

U Wool or ﬁbers

D Farrier services

 

[j Pelts, hides or leather

[3 Other horse products (e.g., semen)

 

D Feathers

El Honey and other apiary products

 

D Garden rentals

[3 Welding/mechanics

 

E] Seeds

 

E] Woodlot products (e.g., logs, lumber, ﬁrewood)

 

 

El Other 1. Please speCIfy:

 

 

 

D Other 2. Please specify:

 

 

 

Processing of Foods and Beverages

 

[3 Wine

[3 Teas

 

D Juice and Ciders

C] Frozen fruits/vegetables/bemes

 

D Jams/jellies/preserves

C] Frozen meats

 

Cl Hams and sausages

D Smoked meats

 

E] Cheese (include gourmet)

Cl Oils and vinegars

 

D Ice-cream (include gourmet)

C] Condiments/seasonings/sauces

 

D Other dairy products (e.g., yogurt)

[:1 Tofu

 

Cl Dried fruits/vegetables/berries

C] Candies (e.g., caramel apples)

 

CI Dried herbs

Cl Syrups

 

D Dried meats

C] Pickles (include olives)

 

 

D Bread and baked goods (include doughnuts)

 

D Health/medicinal enhanced foods (e.g., omega-3 eggs)

 

 

C] Other 1. Please speCify: ‘_'

 

 

 

 

D Other 2. Please specify:

 

 

 

 

208

 

 

 

 

 

Recreation, Tourism and Special Events

 

[:3 Tours (include customized tours)

[3 Wildlife observation (include exotics)

 

E] Wagon/sleighs/hay rides

1:] Fishing (for a fee)

 

D Pick-cut your own (e.g., fruits, trees)

D Paid hunting and customized hunting tours

 

E] Corn maze

E] Hiking/outing

 

D Haunted house/ham

CI Horse riding

 

C] Barn dances

Cl Winter sports (e.g., skiing)

 

C] Tasting rooms

E] Museums

 

[:1 Petting zoo

Cl Weddings

 

[:1 Private parties

[:1 Corporate retreats

 

C] Rodeos

C] Cowboy camps and activrties

 

 

C] Festivals, events and shows (e.g., arts/craft shows, concerts)

 

 

D Other 1. Please specify: 1

 

 

 

C] Other 2. Please specify: '

 

 

 

Lodging and Accommodations

 

[:1 Farm/ranch vacations

D Cottage/cabins

 

[:1 Hotel/Inn/Lodge

Cl Resort complex

 

[3 Bed and Breakfast

[:1 Rv‘s and campground

 

 

 

D Other 1. Please specify:

 

D Other 2. Please specify: .

 

 

 

 

Restaurants and Food Services

 

Cl Dairy store

[:1 Sit-down dining

 

Ci Cookouts/barbecues

CI Take-out foods/beverages

 

[j Picnics

 

[:1 Catering and customized meals

 

[:1 Deli Store

 

C] Other 1. Please Specify:

 

 

 

 

 

C] Other 2. Please specify:

 

 

 

 

 

 

209

 

Health and Cosmetics I

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

D Soaps D Creams and lotions
E] Aromatherapy products (e.g., salts, oils) C] Spas and messages
[3 Other 1. Please specify: 3i
D Other 2. Please specify: — - -
Arts and Crafts
[1 Paintings [:1 Native crafts
D Ceramics/pottery D Clothing
C] Yarns/textiles D Dried flowers
[I Photography D Wood crafts
[3 Candles D Gift boxes (include customized baskets)
[3 Christmas ornaments (e.g., wreaths)
D Other 1. Please specify: _ t , _ _
D Other 2. Please specify: a- _ — d v _
4 Educational Activities
C] Educational tours C] Summer camps
[3 Horse nding/cutting lessons C] Apprenticeships
Cl Classes (e.g., organic farming, permaculture)
D Seminars (e.g., Native cultures, stewardship/conservation)
D Workshops (e.g., wine making, cooking/canning)
Cl Other 1. Please specify: i
D Other 2. Please specify: j
Leasing
[3 Land Cl Equipment
[3 Buildings
C] Animals (e.g., for petting zoos, trekking llamas, for pony rides)
Ci Other 1. Please specify: I:Z:L::QLilli::i.'_‘.“_.~_w.‘:._‘f.':i-..--.---”-..‘__.__:_-_-..-....._-..:i:
D Other 2- Please specify: WM

 

210

 

 

 

 

 

 

 

Easements

 

C] Scenic Easements § [3 Development rights

 

C] Conservation easements i C] Utilities
.

 

[:1 Recreational easements (e.g., hunting, ﬁshing, trails)

 

CI Other 1. Please spemfy:

 

 

C] Other 2. Please spemfy:

 

 

 

Time Shares

 

Please describe time share

 

 

 

 

other Products and Services

 

CI Other Product/Service. Please speCify:

 

 

D whetpredyst/Seoice,Bleessépwfx: .

 

Cl Other Product/Service. Please speCIfy:

 

 

 

2. Were your different enterprises developed at the same time or phased In over time?

 

C) Developed at the same time

 

C‘ Phased in over time

If phased in over time, please indicate the order in which your enterprises were
developed (1 = the ﬁrst developed). For example, if 'Processlng of Foods and
Beverages' was the first enterprise you developed, It should receive a '1'.

The different production/enterprise categories that appear in the table below are
based on the responses that you provided in Section u.

 

Production/Enteprise Categories Order of Development

 

 

Crops Sales
(e.g., grains, nursery, grapevines, herbs, ﬂowers,
Christmas trees)

i
i

(iiumEETZniy)

 

r—n-.._.,,

l

Livestock and other Animals Sales

 

(e.g., cattle, emus. mink, chickens. ﬁsh. apiaries) mufﬁn“ 0'...”
other Agriculture Products and Services rw—“j
(e.g., milk, meats, wool, woodlots, feedlots, animal ‘

 

 

 

 

 

training) (Nu;her—x-:nly)

Conﬁnueu.

 

211

 

 

 

...Continued

 

Processing of Foods and Beverages
(e.g., Wine, cheese, dried herbs, baked goods)

 

(Nut-tiger; vonly)

 

Recreation, Tourism and Special Events
(e.g., taurs, pick-your-own, corn maze, horse
riding, hunting, weddings, festivals)

1““ ““"ﬁ

Ls. , ..
(Numbers only)

 

Lodging and Accommodations
(e.g., B&B, cottages)

(Numbers only)

 

Restaurants and Food Services
(e.g., dairy store, catering, deli)

L_._._;
(Numbers only)

 

Health and Cosmetics
(e.g., soaps, spas)

1"“

 

(Numbersueniy)

 

Arts and Crafts
(e.g., dried ﬂowers, photography, candles)

 

L, ._ .,,A_
(Plumbers only)

 

Educational Activities
(e.g., workshops, seminars, horse clinics)

,.4..__- ..

i .
(Numbers only)

 

Leasing
(e.g., land, equipment)

1

(Numbe;only)

 

Easements
(e.g., conservation easements)

i

i i
(Numbers only)

 

11me shares

i we... .-kt

(iiuivTiETFSniy)

 

 

other Products and Services
(e.g., contracting, composting, recycling)

 

(eunTbliBniy)

 

 

 

1. What was the total gross value of sales for your farm/renal in 2004? Include sales of all
caps, livestock, agriculture products, and other products/services sales related to your
/

Section I “V

Salk: MWa/mt Revenues

farm randi.

 

C.

None 0 $25,000 - $49,999

 

f‘i

Less than $1,000

0 $50,000 - $99,999

 

0

$ 1,000 - $2,499

0 $100,000 — $249,999

 

$2,500 - $4,999 0

$250,000 - $499,999

 

()0

$5,000 - $9,999

I
\

$500,000 - $999,999

 

 

C)

$10,000 - $24,999

0

 

$ 1,000,000 or more

 

 

212

 

 

 

 

 

 

2.

percentage of your

farm/ranch revenues come

from each of your

production/enterprise categories in 2004 and how important are these revenues to the
continued operation of your farm/ranch?
The different production/enterprises categories that appear in the table below are based
on the responses that you provided in section ii.

The %'s should add up to 100%.

 

 

 

(e.g., grains, nursery, grapevunes,
herbs, ﬂowers, Christmas trees)

‘ . . ' %of', 3:1.
Producéion/Erli-Itgynses . Form/Ramme-
(Sources of Revenues) Revenues " V. .
t ,, 0 Very Important
Crops Sales .00 96 0 important

(Number: only)

0 Somewhat important
0 Not important

 

Livestock and Other Animals Sales
(e.g., cattle, emus, mink, chickens,
fish, apiaries)

,0095

(Number: only)

0 Very Important

0 important

0 Somewhat Important
0 Not Important

 

Other Agriculture Products and
Services

(e. 9., milk, meats, wool, woodlots,
feedlots, animal training)

..0096

(Numbers only)

0 Very important

0 important

0 Somewhat important
0 Not important

 

Processing of Foods and
Beverages

(e.g., wine, cheese, dried herbs,
baked goods)

‘.00%

i._..__...

(Number: only)

0 Very Important

0 imponant

0 Somewhat Important
0 Not Important

 

Recreation, Tourism and Special
Events

(e.g., tours, pick-your-own, corn
maze, horse riding, hunting,
weddings, festivals)

.00 $5

(Numbers only)

0 Very Important
important
Somewhat Important
Not Important

 

Lodging and Accommodations
(e.g., see, cottages)

.00 ‘1:

(Number! only)

Very important
important
Somewhat important
Not important

 

Restaurants and Food Services
(e.g., dairy store, catering, deli)

w 00%

(Numbers only)

Very important
important
Somewhat Important
Not Important

 

Health and Cosmetics
(e.g., soaps, spas)

.00 as

(Numbers only)

Very important
important
Somewhat important
Not important

 

Arts and Crafts
(e.g., dried ﬂowers, photography,
candles)

 

 

.00 96

 

(Numbers only)

 

very important
Important

0 Somewhat Important
0 Not important

GO 0000 0000 0000 000

 

 

Continue...

 

213

 

 

 

...Continued

 

Educational Activities
(e.g., workshops, seminars, horse

Homes

0 Very important
0 important
0 Somewhat Important

 

9
(e.g., land, equment)

(Number: only)

clinics) (Numbers only)
0 Not Important
w--- p 0 Very Important
Leasin i____ ~00 95 0 important

0 Somewhat important
0 Not Important

 

Easements
(e.g., conservation easements)

< .00 96

x.—

(Numbers only)

0 Very Important

0 Important

0 Somewhat important
0 Not important

 

Time shares

(Number: only)

0 Very Important

0 important

0 Somewhat important
0 Not important

 

re. -~._ ._

0 Very Important

0 Important

0 Somewhat Important
0 Not Important

 

 

 

 

Other Produds/Services V '00 %

(e.g., contracting, composting, “ ”"

recychng) (Numbers only)
Tb‘l'tl

 

 

 

3. Are your diversification enterprlses: check all that apply.

 

D All enterprises are generating positive net revenues.

 

[:1 Some enterprises are generating positive net revenues.

 

D All enterprises are breaking even.

 

D Some enterprises are breaking even.

 

D All enterprises are operating at a loss (costs > revenues).

 

 

Cl Some enterprises are operating at a loss (costs > revenues).

 

 

214

  

 

 

 

Section {V
QDitx'ens‘i'ficatwn 9001.} anJOﬁjectii/es

Which of the following goals/objectives were Important for your decision to diversify
yourfarm/ranch? Please, check all that apply.

 

D To keep the farm/ranch in the family.

 

C] To allow us to continue farming or ranching.

 

C] To generate additional income.

 

C] To generate revenues during off/non-growing season(s).

 

C] To reduce the impacts of catastrophic events (e.g., crop loss, diseases, loss of market).

 

D To offset ﬂuctuations in farm/ranch revenues
(e.g., reduced production, lower prices, weather problems).

 

D To generate additional revenues from already existing farm/ranch resources
(e.g., land, buildings. equipment).

 

C] To qualify for a state/federal assistance programs
(e.g., pnce supports. state grant, tax incentive).

 

D To capitalize on a special interest or hobby.

 

E] To reduce overall farm/ranch debt.

 

C] To enhance our ability to meet finanCial/loan obligations.

 

C] To proVide employment opportunities for family members.

 

C] To respond to a need or opportunity in the marlret (e.g., demand for a speCialty product).

 

D To increase and/or diversify my market.

 

C] To provide current customers with new products and services (e.g., B&B for hunters).

 

C] To get to know and interact with customers/viSItors.

 

C] To educate customers concerning fanning or ranching
(e.g., organic production, conservation practices).

 

D To make the farm/ranch less dependent on outSide factors
(e.g., not dependent on commodity prices and export markets).

 

D To provide a new challenge.

 

C] To enhance the quality of life of myself or my family.

 

 

C] Other Reason. Please Explain:

.7....,._-- .. -..... --.- -....-‘-_r_.. -- ...-..-... -- -_ - -...._,__..___.‘___._____‘-- -- . ------.-- -..- - -..--v.--“ --...- ---..-_ W.-- - ...m -_ .. .. .-., .

 

C] Other Reason. Please Explain:

 

 

 

 

 

 

215

 

 

.ﬁxnbn10'
ﬂssessmeut of ”Your Wers‘gﬂcatiou goal}

1. In Sectlon V, you Indicated some lnltlal goals (l.e., objectlves) that were Important for
dlverslfylng your farm/ranch. Please, indicate the level of importance of such goals.
The goals that appear in the table below are based on the goals that you selected as
Important In section v.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Level of Importance .
Your Initial Goals 5 E I hay g ”y ; “
("pot-tan! Important Important : Moor-mt
To keep the farm/ranch in the family. 0 O O 0
To allow us to continue fanning or ranching. O O O 0
To generate additional income. 0 O O 0
To generate revenues during off/non-growing
season(s). O O O 0
To reduce the impacts of catastrophic events
(e.g., crop loss, diseases, loss of market). 0 O O 0
To offset ﬂuctuations in farm/ranch revenues
(e.g., reduced production, lower prices. weather O O O O
problems).
To generate additional revenues from already
existing farm/ranch resources (e.g., land, 0 O O 0
buildings. equipment).
To qualify for a state/federal assistance
programs (e.g., price supports, state grant, tax 0 O O O
incentive).
To capitalize on a special interest or hobby. O O O ,
To reduce overall farm/ranch debt. 0 O O 0
To enhance our ability to meet financial/loan
obligations. O O O 0
To provide employment opportunities for family
members. 0 O O 0
To respond to a need or opportunity in the O O O 0
market (e.g., demand for a specialty product).
To increase and/or diversify my market. 0 O O 0
To provide current customers with new 0 O A
products and serVices (e.g., B&B for hunters). V
To get to know and interact with
customers/ViSitors. O ‘J 0
To educate customers concerning farming or
ranching (e.g., organic production, conservation 0 O O O
practices).
Conﬁnue".

 

216

 

 

 

."Conﬁnued

 

 

 

 

 

To make the farm/ranch less dependent on

outSide factors (e.g., not dependent on O O O O
commodity prices and export markets).

To provide a new challenge. 0 O O 0
To enhance the quality of life of myself or my

family. 0 O O 0
Your other reason:

'Your other reason #1 l5 inserted here' 0 O O 0
Your other reason: a

'Your other reason 82 is inserted here' V O O O

 

 

 

 

 

 

2. To what extent were your lnltlal goals aocompllshed after you diversiﬁed your farm or
ranch?

The goals that appear In the table below are based on the goals that you selected as
Important In Beetlon V.

 

Level of Accomplishment

Completely PM. No

a... ...

 

Your Initial Goals

7»
.

 

To keep the farm/ranch in the family.

 

00

To allow us to continue farming or ranching.

 

To generate additional income.

 

To generate revenues during off/non-growing season
(5)

 

To reduce the impacts of catastrophic events (e.g.,
crop loss, diseases, loss of market).

 

To offset ﬂuctuations in farm/ranch revenues (e.g.,
reduced production, lower prices, weather problems).

 

To generate additional revenues from already existing
farm/ranch resources (e.g., land, buildings, equipment).

 

To qualify for a state/federal assistance programs
(e.g., pnce supports, state grant, tax incentive).

 

To capitalize on a special interest or hobby.

 

To reduce overall farm/ranch debt.

 

To enhance our ability to meet ﬁnanCIal/loan
obligations.

 

To provide employment opportunities for family
members.

 

To respond to a need or opportunity in the market
(e.g., demand for a speCialty product).

OOOOOOOOOOOOO

 

C)

To increase arid/or diversify my market.

 

To provide current customers with new products and
services (e.g., B&B for hunters).

OOOOOOOOOOOOOOO
0000000000000

0

 

 

 

 

 

Conﬂnue".

 

217

 

 

 

...Continued

 

 

 

 

 

 

 

 

 

 

 

To get to know and interact with customers/Visitors. O O C:-
To educate customers concerning farming or ranching O C‘
(e.g., organic production, conservation practices). '/
To make the farm/ranch less dependent on outside \

factors (e.g., not dependent on commodity prices and C- O 0
export markets).

To provide a new challenge. 0 O 0
To enhance the quality of life of myself or my family. 0 O Q
Your other reason: A A
'Your other reason #1 IS inserted here' V O V
Your other reason:

'Your other reason 6‘2 is inserted here' C O O

 

 

3. Based on your experience and knowing what you know now, would you again make the

decision to diversify your farm/rand"

 

 

0 Yes. Please explain why:

 

 

O No. Please explain why not:

 

 

 

 

4. Would you recommend others that they diversify their farms or ranches?

 

0 Yes. Please explain why:

 

l
i

 

O No. Please explain why not:

 

 

 

 

 

5. How many total persons dld you employ In your farm/ranch operation lnciudlng all
production categories (e.g., crops and livestock, recreation, tourlsm and special events,

processing of foods and beverages) in 2004?

 

FullTlme f FullTlme
Year Round Seasonal

Part Time
Year Round

Part Time
Seasonal

 

Family Members

 

Non-Family Members

 

TOTAL

 

 

 

 

 

 

218

 

 

 

 

6. How many persons could you have employed if you had only engaged in traditional
farming and ranching, and am diversified your operation?
Full Time ‘ Full Time . Part Time Pan Time
Year Round Seasonal Year Round Seasonal

 

Family Members

 

 

 

i

 

 

Non-Family Members

 

 

TOTAL

 

 

 

 

 

7. To what extent did the farm/ranch net Income change because you diversiﬁed?

 

0 Net income Signiﬁcantly increased after diversiﬁed

 

0 Net income slightly increased after diversiﬁed

What was the percent increase of
thﬂarm/ranch net Income?

 

0 Net income did not increased nor decreased after diverSIﬁed

 

 

0 Net income decreased after diversiﬁed

 

Mi

What was the percent decrease of
the farm/ranch net income?

 

e. To what extent did the farm/ranch debts change because you diversiﬁed?

 

O Debts signiﬁcantly decreased after diversiﬁed

 

O 08th slightly increased after diversiﬁed

%

arm/ ranch debts

What was the percent decrease of

the f 7

 

O Debts did not decreased nor increased after diversiﬁed

 

 

O Debts increased after diversiﬁed

 

%

What was the percent increase of
Shogun/rand debts?

 

1. Who Is the decision—maker regarding

farm] ranch?

Decision-Maker In Agriculture Matters

Section (VII
ﬁnancing, Marketing and' Management Information

Decision-Maker in Business Matters

agriculture and business matters In your

 

C)
C)

Owner/manager
Manager other than 0

’)OO

 

/ Other

wner

Fan'ner/rancher and Signiﬁcant other
Farmer/rancher household (i.e., family)

 

O (T)

O

O- Other

Owner/manager

Manager other than owner
Farmer/rancher and significant other
C! Farmer/rancher household (I.B.. family)

 

 

 

219

 

 

 

 

 

2. How did you ﬁnance the start-up and the operation of your diversiﬁed enterprises? check

all that apply.

 

1:] Bank Loan

C] Investor(s)

 

Cl Personal ﬁnancing

D Family ﬁnancing

 

E) State grant or program funding

 

Cl other

 

3. What sources of information have been the most useful in the start-up and operation of

your diversified enterprises? check all that apply.

 

start-up of Your Diversified Enterprises
check all that apply.

Operation of Your Diversiﬁed Enterprises
Check all that apply.

 

C] Universuty Extension Services

U Universny Extension Sewices

 

[:l UniverSIties/Colleges

D Universities/Colleges

 

C] Federal Agriculture AgenCIes

C] Federal Agriculture Agencies

 

Cl State Agriculture Agencies

E] State Agriculture Agencies

 

C] Paid Consultant

U Paid Consultant

 

Cl World Wide web (lntemet)

[3 World Wide Web (Internet)

 

D Economic Development AgenCIes

Cl Economic Development Agencies

 

Cl Chamber of Commerce

C] Chamber of Commerce

 

D Conferences/Workshops

D Conferences/Workshops

 

[:1 Small Business Agencnes

D Small Busmess Agencies

 

C] Farm/Ranch Organizations
(e.g., Farm Bureau)

U Farm/Ranch Organizations
(e.g., Farm Bureau)

 

D Natural Resources Conservation Services

D Natural Resources Conservation Services

 

Cl None

Cl None

 

 

D Other

 

D Other

 

4. Do you have any plans to add a new enterprise in your farm [ranch‘r Check all that apply.

 

ONO

 

0 Yes.

if yes, please indicate what type(s) of category you are planning to develop and
wh

 

Production/Enterprise Categories

Development Time Frame

 

herbs, ﬂowers, Christmas trees)

DCrops Sales (e.g., grains, nursery, grapevines,

r___.__.___.._ms
Lse'ec‘ “mm;

 

CILivestock and other Animals Sales

(e.g., cattle, emus, mink, chickens, ﬁsh, apiaries)

csaéEMEEEQEETQ

 

animal training)

Dother Agriculture Produas and Services
(e.g., milk, meats, wool, woodlots, feedlots,

 

 

 

 

 

 

DProcessing of Foods and Beverages
(e.g., wine, cheese, dried herbs, baked goods)

 

 

 

 

 

Continue...

 

220

 

 

 

.nConﬁnued

 

URecreatlon, Tourism and Special Events _._._.~-_ﬁ_-__.~_s._
(e.g., tours, pick-your‘own, corn maze, _Z§?'EEI"29 Frame- :2
horse nding. hunting, weddings, festivals)

 

[Lodging and Accommodations

iééiﬁﬁiﬁé‘ﬁéﬁei v
(e.g., B&B, cottages) “...-“w...“

 

DRestaurants and Food Services
(e.g., dairy store, catenng. deli)

 

UHealth and Cosmetics (e.g., soaps, spas) :EE‘EEFTEEEIEE:X

 

DArts and Crafts (e.g., dried ﬂowers,

- Sela—cl Time Frame -_:‘
photography, candles) --..a-.-H....---.....s_.u.-_._., .

 

[Educational Activities (e.g., workshops,

. . - Select Time Frame - v
sermnars. horse clinics) ~.7.._Mss-__.4.c

 

 

 

DLeaslng (e.g., land, equipment) :éﬂegci‘l‘imeﬁégmw- v
DEasements (e.g., conservation easements) -Seledl1memee:v
Summons SIaTmFamv

 

D other Products/Services
(e.g., contracting, composting, recycling)

 

 

 

 

 

 

 

 

5. Do you have a written business plan?
0 Yes O No

6. Do you have a marketing plan that ldantllas your target markets, marketing ohjauivas
and merketlno methods (mo- advertlslno)?

OYes ONO

.Which of the following methods did you use in 2004 to sell your produds/servloes? What
parcenta of your total farm/ranch sales was sold through various methods?
ﬁle total should be 100 percent.

 

[:1 Wholesale sales of products 3' L00 96

 

 

 

 

[I 'On farm/ranch' market :00 96
E] 'Off farrn/ranch' retail stores/supermarkets that mm :_—:00 96
C] 'Off farm/ranch“ retail stores/supermarkets owned My: :00 96
U lntemet and/or Virtual market T—iﬂo 96

 

1:] Farmers' markets

 

 

 

 

 

 

 

 

 

 

 

[3 'Off farm/ranch' non~store locations (e.g., roadstde, gas station) “00 96
[:1 Direct sales to customers :00 96
D Direct sales to resorts and restaurants ::E.00 96
D Other. Please specufy: ::.00 96
””“” *nwn"“' lmw

 

 

 

 

221

 

8. Are you currently a member of any business related associations?

 

 

O No
if yes, specify the type of business related associations/organizations.
Please check all that apply.
D F arm/ranch diversification related associations (e.g., farm tourism)
0 D Busmess assoaations (e.g., B&B, Christmas tree. maple syrup, sheep producers)
Yes

[:1 Chamber of Commerce

[:1 Economic Development Organization
[:1 Tourism organization

[:1 Other

 

 

 

 

9. What methods did you utllze to market your products and services in 2004? Please check
all that apply.

 

C] Web page

 

D Direct mail to current and potential customers

 

E] Sales promotions (e.g., coupons. specials)

 

C] Direct shipping of products

 

D Customer newsletters

 

[:1 Listings in specialized directories (e.g., farm market directories, tourism directories)

 

[3 Customer loyalty clubs (e.g., wine club)

 

[:1 Product subscriptions (e.g., wine subscriptions)

 

D Through an Association (e.g., Christmas trees, maple syrup, 88:35)

 

D Ads in media (newspapers, radio, magazines, TV)

 

C] Printed materials (e.g., brochure)

 

D Trade shows and speccal events (e.g., fairs)

 

[3 Special labeling (e.g., pasture fed, antibiotic free)

 

 

D Other. Please specify: i

 

 

 

Section rVIII
Cﬁamcten'stics of tﬁe Tenn/Rand Operator

 

paw.w
-' ﬁver-lg
I: 0‘

.‘ -‘ Vi

. w"
{L

.l

p

l

l

l

. :li

222

 

 

1. what is the age, gender, race/ethnicity and education or the farm/ranch operator (or
senior partner)?

 

 

 

A99 1:..Sﬁé'ééééé: ,9.
Gender 0 Male 0 Female
Ram/Ethnicity Sesame/Etna» - 7“" 9 ,

 

 

~ Select Highest Level of Education 7} g . v
Education

 

 

 

SeledDisciplIne i v

 

2. At which occupation did the operator (or senior partner) spend the majority (50 percent
or more) of his/her work time in 2004?

C- Farming or ranching occupation
O A non-fanning/ranchmg occupation

3. Is the operator retired from a previous profession/job?

O Ves O No

a

. Did the operator (senior partner) mm: the farm/ranch during 2004?

 

 

0 Yes How many days did the operator (or senior partner) work at least 4 hours per
day off the farm(ranch in 2004?

..I 5995‘ WP?" 9f.93Y5..f_ "..

 

 

 

5. Does the farm/ranch operator (or senior partner) live on the farm/ranch?
0 Yes O No (You Will be skipped to question 7)

O

. What is the relationship to the operator, the age and gender oi the operator‘s family
members living enigma? Do not include the operator.

 

 

 

 

 

 

 

 

 

Jihelatlonshln’irthe'dnéréforf Isl-Tender T
A
"mm"~*‘*'~~-~“--m-—'-— r~~‘-"~*—~—m w Male
Person 1 I-Select Relationshi - v i-Seleci e- V
-..W.-...--s...._-_.-s...-g._....... is... mmégw--w.- C Female
, .,...s......._ . .-. w ”w” .. (\ M l
Person 2 ﬁstsﬁeeyeﬂibﬂg. ﬁshers: X 3 °
v Female
F"~“"““’“““"’”"“-“" f““‘“““"’"~“"‘”' C Male
Person 3 :-Select Relononship- v ‘-SeledAge- v A
. ..... . ... ._ k," Female
..c..............__.._._.._.»........ ,__...___,.._c...____..... C; Male
Person 4 - Select Relationship - v - SeledAge - v A
w ----~~~~~—~—~—~-»~-~~~ .-.- ~~~~-~~~v~~ u Female
A
Person 5 i-Select Relauonshi ‘ V -Seleu 9' v
. . . ~~~~~ p Ag ~ C Female
pm... a ‘L’saga‘sagu‘aagari‘: 't'é‘giaaag‘r‘: 9' “a“?
U ..p . WW“ 0 Female

 

 

 

 

 

 

 

223

 

7. Did the spouse or significant other of the operator (or senior partner) work in 2004
Please, check all that apply

 

0 Do not have spouse or signiﬁcant other

 

 

 

O No
Did he or she work on the farm?
0 No
0 Yes. If Yes, check the activities that he or she performed on the farm.
(Check all that apply).
[3 Fanning/ranching activities
0 Yes D Assisted with diversiﬁed activities (e.g., foods processing, farm tours)

 

 

Did he or she work off the farm?
0 No

0 Yes. If Yes, select the number of days that he or she worked at least 4
hours per day off the farm/ranch.

- Select Number of Days - Y]

 

 

 

8. in what year did the operator (or senior partner) begin operating the farm] ranch?

i (hearted, marten. Fer-exarrgrlei 1008)

9. in what year did the operator (or senior partner) first diversify the farm/ranch?

L I (Meeker-Idlers. Ferexenpler ”03)

10. Which of the following best represents the annual household income before taxes of the
operator? (include form net income, wages, salaries, social sewﬂty and retirement

 

 

 

 

beneﬁts).
0 Less than $25,000 0 $75,000 - $99,999
0 $25,000 - $34,999 0 $100,000 - $149,999
0 $35,000 - $49,999 0 $150,000 - $199,999
0 $50,000 - $74,999 0 More than $200,000

 

 

 

 

End of Survey!

Thanks for your Participation!

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