This study investigates productive efficiency for a sample of Missouri crop-only (specialized) and integrated crop-livestock (diversified) farms using a cost frontier approach. Results suggest that significant cost inefficiency exists among sample farms. Lower cost efficiency in both types of farms was attributed to improper scale of operations and misallocation of inputs. On average, diversified farms were as technically and scale efficient as specialized farms. Lower allocative efficiency diluted gains in technical efficiency and resulted in greater cost inefficiency for diversified farms than for specialized farms. Technical efficiency was independent of farm size, whereas allocative, scale, and scope efficiencies were not.

Recent consolidation in agriculture has shifted production toward fewer but larger farms, reshaping business relationships between farmers, processors, input suppliers, and local communities. We analyze growth and diversification of U.S. corn, wheat, apple, and beef farms by examining longitudinal changes in 10 size cohorts through three successive censuses. We fail to reject Gibrat's law in apple and wheat industries and the mean reversion hypothesis in beef and corn industries. Apple and wheat farms diversify over time. The findings suggest that scale economies diminish for large farms across all four industries and scope economies dominate scale economies for large apple and wheat farms.