Nonpecuniary Benefits to Farming: Implications for Supply Response to Decoupled Payments

We develop a household model wherein farmers allocate labor to maximize utility from leisure, consumption, and nonpecuniary benefits from farming. The model shows that farmers with decreasing marginal utility of income respond to higher decoupled payments by decreasing off-farm labor and increasing farm labor, resulting in greater agricultural output. We then estimate the difference between farm and off-farm returns to labor using data from three nationally representative farm household surveys. The finding of a large on-farm/off-farm wage differential provides compelling evidence of substantial nonpecuniary benefits from farming.     

Off-farm Labor Decisions by Ontario Swine Producers

The off-farm employment decisions of Ontario swine producers are examined using household production theory. It is determined that human capital and farm characteristics have the largest impact on off-farm labor participation. Increases in education are found to have a larger effect on market earnings than on the marginal value productivity of farm labor, thereby increasing the probability of off-farm employment. The chances are also found to increase with an increase in relative financial obligations as measured by the debt-to-equity ratio. Years of farming experience and farm size have a negative impact on the probability of working off-farm due to their positive relationship with marginal farm labor productivity. The results indicate that the trend to a bimodal farm size distribution will likely continue in the Ontario hog industry. Economic policies designed to increase family farm income may help weather fluctuations in farm income but will have little impact on off-farm employment decisions. Les décisions de rechercher un emploi à l'extérieur chez les producteurs de porcs de l'Ontario ont été examinées selon la théorie de la production des ménages. On a constaté que c'est le capital humain et les caractéristiques de l'explotation qui exercent l'effet le plus fort sur le recours au travail extérieur. L'élévation du niveau de scolarité avait plus d'effet sur les gains obtenus à l'extérieur que sur la productivité de la main-d'oeuvre de l'exploitation, augmentant ainsi d'autant la probabilité de rechercher un emploi extérieur. Ces chances augmentaient aussi avec l'accroissement des obligations financières relatives, mesurées par le ratio dette-avoir propre. Le nombre d'années d'expérience en exploitation et la taille de l'entreprise avaient uneffet négatif sur la probabilité de travailler à l'extérieur, à cause de leur association positive avec la productivité marginale de la maind'oeuvre de l'exploitation. Ces résultats indiquent que la tendance à une distribution bimodale de la taille des exploitations devrait se poursuivre dans le secteur de l'élevage du porc en Ontario. Les politiques économiques destinées à améliorer le revenu des fermes familiales devraient les aider à surmonter les périodes de creux, mais elles n'auront que peu d'influence sur la décision de chercher un emploi à l'extérieur.     

Comparative Evaluation of Farm Inputs and Services Networks in New York and Ontario

Use, availability, and satisfaction of 22 farm business services by dairy farm households were compared among four neighboring regions in Ontario and New York to examine the effects of government support policy. The supply management policy applied to milk production in Ontario is associated with different input usage and greater perceived availability of farm inputs and services than more market-oriented policies in New York. Families in both countries tended to be more satisfied with supply and production services and less so with labor and loan services. Since availability of services is correlated with density of production and the level of returns, policy changes that result in fewer producers will ultimately cause satisfaction with farm input services to decline.     

The Theory of the Farm Household: An Application to Saskatchewan

A theoretical model is presented which integrates the consumption and production components of the rural household. A theoretically determined system of expenditure equations, derived factor demand equations and an off-farm labor supply equation are estimated using primary data for Saskatchewan farm households. From the empirical results we conclude that if the wage rate can be observed or estimated, the farm household's behavior can be explained empirically in a manner consistent with received theory. Summary and Conclusions A theoretical model integrating the consumption and production sides of the farm household or enterprise is estimated empirically using primary data for Saskatchewan farm households. The farm household was assumed to maximize its utility function subject to farm production and cash flow constraints. The empirical results indicate that the theoretical model can be estimated successfully even when data are sparse. While the coefficients for the expenditure, derived demand, and off-farm labor supply equations are consistent with coefficients from similar equations estimated separately by others, the theoretically more precise integrated approach specifies the simultaneous effect of the variables across equations. From the empirical results and the theoretical considerations it is obvious that the wage rate is a key explanatory variable in the model. The wage rate links the three components of the model–final expenditures, the derived input demands and off-farm labor hours. The wage rate is one determinant of the allocation of the operator's time (although other factors such as the nature of the operation and opportunities to work off-farm dominated in this study), and both the wage rate and the allocation of the time determine the eventual income available to the rural household. In essence, then, the problem of explaining farm household behavior when the household's business enterprise function cannot be separated from its consumption activity is similar to that of traditional models based on the theory of the firm and models of consumer behavior. The only difference is that the wage rate is observable in the traditional models but needs to be estimated as a shadow price in models which seek to explain rural household behavior. As a result, research in this area must start with an explanation of the allocation of (at least) the operator's labor and a measure of the shadow wage rate. If the entire household's allocation of time between on-farm and off-farm labor and leisure is determined, it is possible to treat its consumption and production activities separately. Further research is required to extend the model to explain household labor supply to both the farm and off-farm labor markets.     

Welfare implications of reduced government subsidies to farm families: accounting for fringe benefits

In the past three decades, farm families have relied on government payments and off‐farm income to reduce income risk and increase total household income. Studies have shown that, as the income effect dominates, government payments tend to reduce off‐farm labor of farm operators and spouses. But that may not be true if one accounts for fringe benefits associated with off‐farm employment. Additionally, with looming budget deficits and the possibility of a reduction in decoupled government payments, farm families may be facing an altered economic environment. Our study addresses this issue by examining the links between government farm program payments and the ever‐important role of fringe benefits in the off‐farm employment of farm couples. Results from farm‐level data actually show that the marginal effect of government payments on hours worked off‐farm will decrease in magnitude when accounting for fringe benefits, ceteris paribus. These results support the notion that farm households’ welfare loss stemming from reduced decoupled payments may be overstated when models exclude fringe benefits from the estimation of off‐farm labor supply.     

Off-farm Labour Supply with Productivity Increases,Peak Period Production and Farm Structure Impacts

The study of of-farm employment of farm family members in the context of a neoclassical time allocation model of labor supply is used to attempt to explain the amount and type of off-farm employment currently prevalent on the Canadian Prairies. The effect of labor saving technical change together with a production process characterized by periods of peak activity affect the priority that may be assigned to off-farm work These factors require explicit consideration in the theoretical framework for the study of off-farm employment. The refinements occasioned by expanding the paradigm in this manner have implications for the role of rural development policy in the support of the agricultural sector     

The Impact of Coupled and Decoupled Government Subsidies on Off-Farm Labor Participation of U.S. Farm Operators

With the 1996 Farm Act, the United States introduced payments that were designed to be "decoupled." Labor allocation choices are likely to be affected by receipt of payments, and income from off-farm jobs has been the major source of income for most farm households for sometime. This article examines whether the 1996 change has affected the off-farm labor participation of farm households. We conclude that the observed increase in off-farm participation of farm operators who received payments was not the result of the 1996 policy change. Government payments, whether coupled or decoupled, have a negative effect on off-farm labor participation.     

Fertilizer Use, Risk, and Off-Farm Labor Markets in the Semi-Arid Tropics of India

A two-period model is developed in which a risk-averse farmer uses off-farm labor to smooth consumption, leading to greater use of fertilizer. Fertilizer demand is shown to increase with the depth of the off-farm labor market. Controlling for exogenous weather risk, farmers use more fertilizer the lower the unemployment rate and the higher the share of nonagricultural work in total off-farm labor. The results suggest that off-farm labor markets and own-farm production may be complementary in risky production environments, so that policies which promote the depth of the off-farm labor market in low-income areas may also bolster farm productivity.     

杭州、绍兴农户劳动力流动与农户土地利用群体类型的Crosstabs分析

研究目的：根据农户转出劳动力就业形式、流动规模和农户土地利用方式分别进行农户群体类型划分,探讨农户劳动力流动和土地利用的相互关系,以期为制定农村地区发展政策提供基础研究支持。研究方法：针对杭州、绍兴农户劳动力流动的情况,选择了7个村159户农民进行实地调查,在调查的基础上,对调查数据进行统计分析。研究结果：（1）调研地区农户群体类型分划基本清晰,主要为打工主导型和转出滞留型,占调研总数的50.94%、30.80%;（2）45.68%的打工主导型农户和22.45%的转出滞留型农户将土地全部转出用于农业用途,户均转出面积分别为0.12 hm2、0.14 hm2,而32.65%的转出滞留型农户则将全部土地用于耕种粮食作物,户均种植面积为0.13 hm2;（3）各类型农户目前主要为解决家庭消费用粮而耕种土地,64.20%的农户打算今后几年继续上年的土地经营状况,有扩张经营规模的农户比例相对较低。研究结论：根据不同农户群体类型的特点制定对应性实施政策,合理引导永久迁移主导型农户家庭向城镇地区转移,关注劳动力滞留型农户的土地耕种意愿,对其他4类农户群体则制定适宜的劳动力转移和土地利用保障政策。     

Family Composition and Off-Farm Participation Decisions in Israeli Farm Households

This article studies the relationship between the off-farm participation behavior of farm operators and their spouses and the demographic composition of the household. We focus on farm families without parents, siblings or partners, and examine the effects of the existence of elderly children of the farm couple. We find that both the father and the mother tend to reduce their participation in off-farm work as the number of elderly children rises. This result holds even after controlling for observed characteristics. We also find that the effect of elderly children stems from considerations related to both farm production and household production.     

Intertemporal analysis of employment decisions on agricultural holdings in Slovenia

The article attempts to quantify determinants influencing the dynamics of employment decisions on agricultural holdings in Slovenia and to test specific aspects of labor reallocation during the transition period by the application of an agricultural household model. Through the use of a 1991–2000 longitudinal data set for 22,055 farm households, quantitative analysis of intertemporal employment decisions by farm holders is carried out using probit techniques. The determinants tested relate to the personal characteristics of farm holders (gender, age, education level, and potential off‐farm income), household characteristics (size, structure), characteristics of the agricultural holding (economic size, labor intensity), and local labor market conditions. The model results generally confirm existing empirical evidence on asymmetrical and irreversible participation of holders on the labor market. Despite intensive restructuring of agriculture and profound changes in the nonfarm labor market in the analyzed period, labor supply of farm holders remains rigid. The mobility of labor supply is lower than expected, which can be attributed to the importance of structural problems constraining intersectoral mobility. Low labor mobility reduces the efficiency of labor allocation on agricultural holdings in Slovenia. Elements of this problem emerge on both supply (e.g., low level of educational and professional attainment of reference persons) and demand sides of the labor market (e.g., unfavorable local labor market conditions). A marked tendency toward maintaining the same employment status is more distinct in the case of holders employed on‐farm only.     

On Measuring Farmers' Economic Weil-Being

A measure broader than net farm income has been used to examine the economic well-being of farmers. The composite measure incorporating farm returns to labor and management, off-farm income, and net worth values, shows Canadian farmers' economic well-being has improved in real terms since 1967. However, disparity in the measure among provinces has increased. Off-farm income and annuities of net worth have increased in importance, relative to the total economic well-being measure, though at different rates in different provinces, and should not be ignored in agricultural policies and programs.
Two related issues require further attention. One is to examine the interaction of money income and asset ownership within the farm sector; the other is to provide comparison groups in the non-farm sector which take into account money income and net worth. The annuity approach to net worth may provide an appropriate instrument for comparison.     

Off-Farm Employment and Grain Marketable Surplus in China

This paper examines the effects of off-farm employment on grain marketable surplus supply during the reform period in China. A theoretical framework demonstrates that farm households' supply behaviour depends not only on the profitability of farm production but also on alternative off-farm wage opportunities of household members. An empirical model, which assumes full income maximisation of farm households, simultaneously evaluates the effects of on-farm and off-farm income on their grain supply behaviour. Particular attention is paid to the effect of off-farm income through a comparison of conditional and unconditional grain marketable surplus supply elasticities. Results show that off-farm income had a strong negative effect on grain marketable surplus from farm households following liberalisation of factor markets in China and that this could lead to a loss of marketable surplus supply.     

PLURIACTIVITY,FARM STRUCTURES AND RURAL CHANGE

This paper begins by looking at some of the reasons why farm household pluriactivity, although long-standing, has now become a phenomenon of interest to European policymakers. This European concern is then compared with the current interest of UK policymakers and academics in the related concept of farm diversification. In many respects, UK policies differ significantly from those in the rest of Europe, most notably in their neglect of off-farm income-earning opportunities, and the reasons for this are discussed. Furthermore, it is argued that a preoccupation with forms of diversification or pluriactivity is likely to be less helpful analytically than a focus on underlying farm business and farm household strategies. Finally, some preliminary results of empirical work in Devon and Grampian are presented which suggest that farm household strategies may be at variance with prior expectations in some respects.     

A Real Options Approach for the Investment Decisions of a Farm‐Based Anaerobic Digester

The profitability of anaerobic digesters (ADs) for Ontario dairy farmers are examined using real options under current and proposed government pricing policies and investment uncertainty. In the case of a renewable energy initiative such as an AD with large sunk costs and volatile returns, the value of deferring investment may be significant enough to offset the returns suggested by the net present value (NPV) approach. For a 150 cow herd, net revenues should be approximately $1.1 million before the AD is installed using the real options approach as compared to $0.5 million with the NPV approach. An AD is close to generating a positive NPV for a 600 cow herd if for either a 1% increase in the electrical price or decrease in the cost. However, farmers need not invest today and there is a value to delaying this decision from potential improvements in the technology that increase the efficiency and/or decrease operating costs of the AD. The real options analysis indicates that this option to delay investment has a value of approximately $300,000 for a typical Ontario dairy farm. Thus, either significant grant funding or higher feed‐in‐tariff rates are required to induce the increased adoption of AD technology in Ontario today even for the largest of dairy farms. Considering the probability of government support potentially ending, increases the value of investing today but a significant option value to defer still exists.     

Is off-farm income reforming the farm? Evidence from Mexico

Does access to off-farm income complement or compete with agricultural production? This article explores the effect of off-farm income on agricultural production activities, using data from the 2003 Mexico National Rural Household Survey. We first discuss the theoretical conditions under which access to off-farm income may influence production in an agricultural household model. Instrumental-variable (IV) estimation methods are then used to test whether agricultural production activities, technologies, and input use differ between households with and without access to off-farm income. We find that off-farm income has a negative effect on agricultural output and the use of family labor on the farm, but a positive impact on the demand for purchased inputs. There is also a slight efficiency gain in households with access to off-farm income. Findings offer insights into how household production evolves as rural households increasingly engage in off-farm income activities.     

Interrelated labor decisions of farm couples: a censored response analysis of off‐farm work

Farm couples' labor market responses are partly the discrete choice of entering the off‐farm labor market and partly the continuous choice of off‐farm working hours, given entry. Such a setting is interesting when examining the increasing occurrence of multiple job‐holdings among farmers in Western economies. Most existing analyses of off‐farm labor supply only model the decisions of the farmer, not the joint decisions of the farm couple. This article presents a framework for handling such interrelated discrete/continuous choices, involving also farm production and household consumption. The derived two‐equation sub‐model for husband/wife's censored labor responses is estimated from a 10‐year Norwegian panel data for 342 farms. The results agree to some extent with earlier studies, but are more informative because of the longer panels—which allows a more extensive examination of latent heterogeneity and behavioral persistence—because it provides cross‐effects in the spouses' labor supplies. The results show some interesting differences between how the independent variables influence the labor supply of operator and spouse. This is most evident for the cross‐effects of education, children, and wage rate. Overall, the results strongly support applying a panel‐censoring model that accounts for latent heterogeneity in this context.     

Off-Farm Labor Participation Decisions of Married Farm Couples and the Role of Government Payments

The determinants of off-farm work by married farm couples are examined using data from the 2004 Agricultural Resource Management Survey and multinomial logistic regression. Expected government payment is found important in decreasing the likelihood of off-farm work strategies involving work by the husband only or by both husband and wife relative to a strategy of no work by either husband or wife. The marginal impact of government payments on the probability of the wife working off farm alone is found positive suggesting the possibility of nonpecuniary motives for off-farm employment for 21% of farm households in the selected weighted sample.     

Conservation Payments, Liquidity Constraints, and Off-Farm Labor: Impact of the Grain-for-Green Program on Rural Households in China

This study evaluates the labor response of rural households participating in the Grain-for-Green program in China, the largest payments for ecosystem services program in the developing world. Using a panel data set that we designed and implemented, we find that the participating households are increasingly shifting their labor endowment from on-farm work to the off-farm labor market. However, the effects vary depending on the initial level of human and physical capital. The results support the view that one reason why the participants are more likely to find off-farm employment is because the program is relaxing households' liquidity constraints.     

Who has two jobs and why? Evidence from rural coastal communities in west Scotland

This article examines the incidence of and reasons for multiple‐job holding in the context of rural communities where multiple‐job holding is viewed as an important means of promoting community sustainability. Drawing upon a unique data set of a relatively homogeneous population living in an isolated area on the west coast of Scotland, where employment opportunities are limited, dual‐job holding is investigated within the fisheries and aquaculture occupations. Evidence is found that the hours constraints motive for multiple‐job holding better explains multiple‐job‐holding behavior among employed rural workers in aquaculture than among self‐employed fishermen, and that educational attainment has a positive impact on the incidence of multiple‐job holding.