2019 ASHS Annual Conference

The phrase “Don’t put your eggs in one basket” captures the motivation of farmers to diversify under the current agricultural climate. From the financial standpoint, diversification is a way to mitigate risk and improve financial sustainability. Several studies have looked on the economics of farm diversification, but to our knowledge, no study has recently looked into the drivers of crop diversification among FV operations in the U.S. Moreover, there is little information how diversification may be motivated by the choice of market channels. According to Izumi et al. (2010), farm diversification can be one of the main strategies adopted by farmers as a way to respond to the increasing demand of local foods and farm-to-fork movements. For example, farmers selling in local markets may choose to grow more crops to contribute to the colorful supply of FV, a marketing strategy that can help attract customers.

A final motivation for this study relates to the definition of farm diversification in the FV industry. Numerous USDA reports, which focus on traditional row crop production, indicate that a farm producing 4 or more crops is considered diversified. For example, with the surge of organic grains, the traditional row crop industry has begun exploring the value of adding more crops to the widely adopted corn-soybean rotation, and defines a diverse operation as those rotating 3 to 4 crops. In the context of fresh market FV, where the average operation grows 20 crops, a crop mix of 3 to 4 crops does not seem to truly capture farm diversification.

We contribute to the literature in two ways. First, we used an OLS to look into the external and internal factors influencing crop diversification of FV operations. Specifically, we wanted to understand what factors drive or hinder farmers’ likelihood to increase the number of crops in their FV operations. Second, we used a quantile regression to provide a comprehensive picture of the effect of external and internal factors at different degrees of crop diversification (i.e. low, medium, and high diversification). The data for this analysis came from a 2012 web-based survey of fruit and vegetable farmers who were part of the Food Industry MarketMaker database in 16 states. This study focused on a sample of 1,532 farmers that, on average, grew 17 and sold through three market channels.

The results provided evidence that selling in local markets is a major factor influencing crop diversification among fruit and vegetable operations. One explanation is that farmers selling in local markets tend to rely in trust farmer-customer relationships to receive direct feedback from customers . This feedback allows farmers to adapt their crop mix and production practices to meet demand. Another explanation is that crop diversity contributes to colorful supply of FV, which is considered an important marketing strategy to attract customers in local markets. The quantile regression helped us characterize the effects of access to local markets, farmland size and other explanatory variables at different levels of farm diversification. We categorized operations as specialized (quantile 0.25 with 1 to 4 crops), low diversified (quantile 0.50 with 5 to 15 crops), medium diversified (quantile 0.750 with 16 to 28 crops), and highly diversified (quantile 0.99 with 29 to 43 crops) and estimated the effect of the explanatory variables on each quantile. Similar to the OLS results, selling in local markets has a positive effect on crop diversification across all quantiles.

The literature showed inconsistencies regarding farm size and farm diversification. While Mishra and El-Osta (2002) reported a negative relationship between diversification and farm size, McNamara and Weiss (2005) reported that farm diversification tends to increase with farmland. We posit that these inconsistencies in the literature may be due to lumping all levels of farm diversification into a single level of dependent variables. Our quantile results elicited that increasing the farm acreage has a significantly positive effect on crop diversification for specialized farms (P < 0.1), but a significantly negative effect on highly diversified operations (P < 0.05). An explanation for this may be that having access to more acres can help specialized FV farms to add crops to the product mix. On the contrary, the highly diversified farm may have already reached its maximum crop diversity, in which an extra acre will allow growers to focus on the most economically profitable crops rather than adding a new crop to the long list of products.

This analysis contributes to the current local foods and farm diversification literature and sheds light on the barriers and drivers to increase farm diversification among FV operations. Results from the study can help researchers and policymakers to understand what it takes for farmers to diversify and mitigate risk. We also contribute to the farm diversification literature by defining diversification in the context of fresh market FV industry.