REGIONAL CHANGES IN THE DISTRIBUTION OF NET VALUE ADDED IN U.S. AGRICULTURE, 1960-2002

This paper examines the effects of structural changes on the distribution of net value added and the difference between net value added and agricultural income over time. We present and discuss the changes in the distribution of net value added (land, labor, capital, and farm operator income) over time. Net value added by U.S. agriculture grew significantly from $18 billion to 1960 to $95 billion in 1996. We examine regional differences in net value added using the Theil entropy measure. The inequality (dispersion) of net value added increased over time. The increased inequality represented both increases in regional dispersion in net value added and increases in the average inequality in net value added in each region. Thus, the net value added is becoming less alike across the U.S. We also examined the inequality in the components of net value added. The greatest dispersion occurred in returns to land followed by returns to capital. Therefore, changes in the dispersion of net value added by agriculture are explained by differences in the payments to non-operator landlords and to capital.