Agricultural Finance Review

Purpose – The purpose of this paper is to assess the impacts of GM crop adoption on the profitability of farms operated by young and/or beginning farmers and ranchers (YBFR).

Design/methodology/approach – This research uses weighted quantile regression analysis in conjunction with 2004-2006 Agricultural Resource Management Survey to evaluate the impact of GM crop adoption on financial performance of farms operated by YBFR. The methodology employed in this study corrects for the simultaneity of technology adoption and farm financial performance.

Findings – As expected, the impact of GM crop adoption on profitability is positively affected by the scale of operation and leverage. On the other hand, off-farm employment by “beginning” farmers has a negative impact on farm's profitability if they choose to adopt GM crops. Finally, quantile regression results from a farm household study shows that the model performs better at the higher quantile of the distribution.

Research limitations/implications – This study helps to determine whether the adoption of GM crops increases the profitability of farms operated by “beginning” farmers. In addition, it explores the impact of other factors (such as farm, operator, demographic, and financial characteristics) on the profitability of farms operated by “beginning” farmers.

Practical implications – Computing the profitability of adoption decisions for YBFR will provide significant information to YBFR that they can use in constructing their farm operations strategic business plan and future decisions regarding farming operations.

Originality/value – Existing research does not examine the impact of GM crops adoption on farm profitability of YBFR. Furthermore, YBFR operators face significant challenges in making their operations financially viable, owing to lack of access to capital and land.