Exploring Farm Investment Behaviour in Transition: The Case of Russian Agriculture

This paper analyses the investment behaviour of Russian farms during the period of economic stabilisation that followed Russia’s financial crisis of 1998, and is the first to apply the error‐correction investment model to describe farms’ investment behaviour in the transitional context. Additionally, the paper employs the error‐correction and the adjustment‐cost model to test for differences in the investment behaviour between various farm categories. The results show that in general Russian farms exhibited an error‐correcting behaviour in the period under investigation. From 1999 to 2005 the output–capital gap was closed by an average rate of 10% per year. Estimates of the adjustment‐cost model show that Russian farm investments are very sensitive to the sales–capital ratio, suggesting that Russian farms exhibit increasing returns to scale and positive expectations about future revenues. Yet, such farm characteristics as ownership structure, access to input markets and also regional specifics were found to be decisive for farm investment not only in the short but long term too. Finally, the results show that the adjustment‐cost model is adequate for the evaluation of differences in short‐term investment behaviour, whereas it is noticeably less powerful for investigating differences in the farms’ long‐term investment behaviour.     

Entry, Exit, and Farm Size: Assessing an Experiment in Dairy Price Policy

This article models and estimates the forces behind farm exits and changes in herd-size among Connecticut dairy farms under the New England Dairy Compact. A model of sunk costs and farm capital investment is used to specify two econometric estimations: a random effects probit model of farm entry and exit and an autocorrelated generalized least squares panel data model of farm size. The Dairy Compact's price strategy reduced farm exits and moderately increased cow numbers. In contrast, development pressures and historically low unemployment rates increased farm exits.     

Uncertain Land Availability and Investment Decisions: The Case of Dutch Dairy Farms

Within the EU, uncertainty about the possibility of acquiring land can be quite significant for individual farmers in sectors like dairy farming. Farm‐level investment decisions are commonly made ex‐ante, when the farmer is not certain about the possibility of purchasing land. This possibility is realised only in a future period. In this paper, we have developed and applied a simple two‐period model in which a profit‐maximising farmer, facing uncertainty about the possibility of acquiring land, has to choose the optimal mix of capital (buildings) investment and land endowment. We illustrate the model using data from Dutch dairy farms.     

Financing Constraints and Agricultural Investment: Effects of the Irish Financial Crisis

This paper considers the role of financing constraints in agricultural investment since the recent financial crisis. Using Irish micro data over the period 1997–2010, we estimate the Q model of investment and test for financing constraints using a measure of internal finance dependence. Our econometric method controls for censoring, heterogeneity and endogeneity. We find that financing constraints are binding and the impact of constraints becomes much more acute following the financial crisis. Constraints are found to be well above pre‐crisis levels and especially elevated in 2007, 2008 and 2009. The effects are greatest for medium‐sized farms and farms in the dairy sector.     

Farm‐specific Adjustment Costs in Dutch Pig Farming

This paper develops a dynamic model of investment under rational expectations, assuming farm‐specific production technologies and adjustment cost structures. The model distinguishes regimes of negative, zero and positive investments and maintains that it is optimal for a farmer not to invest for a range of shadow prices, depending on thresholds for positive and negative investments. The model is applied to a rotating sample of Dutch pig farms over the period 1980–1996. Farm‐specific parameters of the adjustment cost function and production technology are obtained using Generalised Maximum Entropy estimation. Cluster analysis using the farm‐specific adjustment cost parameters indicates that five groups of farms with distinct adjustment cost structures can be identified. A tobit regression analysis is used to explain the impact of different socio‐economic factors on the size of the threshold between positive and negative investments.     

Getting Institutions "Right" for Whom? Credit Constraints and the Impact of Property Rights on the Quantity and Composition of Investment

Property rights reform is typically hypothesized to boost investment through investment demand and credit supply effects. Yet when the credit supply effect is muted, property rights reform would be expected to induce liquidity-constrained farms to reduce investment in movable capital even as they increase investment in attached capital. This expectation is corroborated by econometric analysis of panel data from Paraguay. While all farmers experience a positive investment demand effect, liquidity-constrained producers correspondingly reduce their demand for movable capital. Given an estimated pattern of wealth-biased liquidity constraints, property rights reform will get institutions "right" for only wealthier producers.     

TAXES,INVESTMENT INCENTIVES AND THE COST OF AGRICULTURAL INPUTS

This paper examines the effects of taxes and investment incentives on relative capital/labour costs on farms of different sizes. Income tax relief reduces the cost of purchased non-capital inputs to farmers, while investment incentives reduce the cost of capital items. A framework is developed for calculating the relative magnitudes of these effects and it is shown that capital costs have been reduced relative to labour costs throughout the post-war period in the U.K. and on large farms (paying a higher tax rate) more than on small farms.     

Empirical investigation of investment behaviour in Australia's pastoral region*

Optimal intertemporal investment behaviour of Australian pastoralists is modelled using panel data for the period 1979–1993. Results indicate that quasi‐fixity of inputs of labour, capital, sheep numbers and cattle numbers is characteristic of production in the pastoral region. It takes about two years for labour, four years for capital and a little over two years for both sheep numbers and cattle numbers to adjust towards long‐run optimal levels. Results also indicate that, after accounting for adjustment costs, own‐price product supply and input demand responses are inelastic in both the short and long run.     

Crop insurance policies and purchases in France

While many crop insurance systems have been reformed around the world, few academic researches have addressed the determinants of the decision on crop insurance at the farm's micro level. In this article, both the financial and the agricultural literature lead to the identification of many rationales for the crop insurance decision. Using data from the period 2003–2006 on a representative survey of French farms (FADN‐RICA), we investigate the different factors that incite farmers to insure against crop risk. We emphasize that the highest risk farms are more likely to have insurance and this decision is positively related to the past amount of claims. Insurance is subscribed by larger farms because insurance appears too expensive for smaller farms, which are indeed naturally less diversified. Interestingly, financial variables (such as capital structure or return on investment) do not significantly determine the insurance decision.     

Transition and agricultural labor

Reforms have strongly affected agricultural employment in transition countries but in remarkably different ways. We present a theoretical model and an empirical analysis to explain differences in labor adjustment during transition. We show that the differences are due to a combination of variations in initial conditions and differences in reform policies and effects. The removal of price distortions and subsidies caused wage and price adjustments during transition and a reduction in labor demand in agriculture. Surplus labor outflow from agriculture was further stimulated by the privatization of the farm assets as they improve incentives and remove constraints for optimal factor allocation and structural adjustment. The shift to individual farms, which was especially strong in labor‐intensive production systems with low labor productivity in agriculture, has reduced the outflow of labor from agriculture by improving farm governance and labor efficiency, although this effect was mitigated by losses in scale economies due to disruptions and market imperfections in transition. In general, labor outflow was considerably lower on individual farms than on corporate farms, due to a combination of factors related to human capital, access to finance, and physical capital. In the last section of the article we present a general framework for understanding labor adjustments in transition countries. Specifically, we show that there are several patterns of labor transition. In one pattern, followed by, e.g., the Czech Republic and Hungary, there is initially a strong survival of the restructured large‐scale corporate farms that have laid off many workers. In the second phase of transition, gradually the importance of individual farms increases. In other countries, such as Romania, the opposite has happened. In these countries there is an immediate strong shift to individual farms, while labor use increases on average in agriculture. After this initial phase, the shift to individual farms continues, albeit more slowly, and labor use in agriculture starts to decline. Finally, our analysis shows that in countries such as Russia and Ukraine much of the surplus labor is still employed by little‐reformed former collective and state farms. Major adjustments await more progress in agricultural and general reforms.     

Impact of debt structure on production efficiency and financial performance of Broadacre farms in Western Australia

Farming activities are often financed using debt, yet empirical studies investigating the relationship between farm debt structure and performance are still rare. Using a 10 year unbalanced panel of Broadacre farms in Western Australia, we relate the impact of long‐term debt, short‐term debt and tax liability on farm performance measured by input‐oriented technical efficiency and return on assets. We find farm technical efficiency is positively related to short‐term debt, tax liability and capital investment, but negatively related to off‐farm income generating activities. Long‐term debt has no effect on production efficiency and return on assets. These results are robust to both parametric and nonparametric methods of estimation.     

Intergenerational Succession on Israeli Family Farms

Using a binary‐choice analysis, we study the likelihood of intra family intergenerational succession on Israeli family farms. This provides policy‐relevant information on the long‐run survival probabilities of these farms in a period of increased vulnerability of family farms. We compare two definitions of succession, one based on an official declaration of a succeeding child, and another which is more operational, based on the existence of an adult child who works on the farm alongside the parents. We also validate the probit results by comparing them to those of a more robust semi‐nonparametric method. We identify a number of family and farm attributes whose effects are statistically significant and consistent with economic theory based on the notion of an economic surplus resulting from intra‐family succession and on the notion of bargaining between the generations.     

Does timing matter? A real options experiment to farmers' investment and disinvestment behaviours

In this article, we analyse the (dis)investment behaviour of farmers in a within‐subject designed experiment. We ascertain whether, and to what extent, the real options approach (ROA) and the classical investment theory can predict farmers' (dis)investment behaviour. We consider a problem of optimal stopping, stylising an option to (dis)invest in agricultural technology. Our results show that both theories do not explain exactly the observed (dis)investment behaviour. However, some evidence was found that the ROA predicted the decision behaviour of farmers better than the classical investment theory. Moreover, we found that farmers learn from repeated investment decisions and consider the value of waiting over time. Socio‐demographic and farm‐specific variables also affect the (dis)investment behaviour of farmers.     

The social construction of “shared growth”: Zambia Sugar and the uneven terrain of social benefit

Recent years have witnessed a growing trend in agricultural investment and large‐scale farmland acquisition in the Global South and a rapid expansion of scholarship and public debate over the nature, consequences, and desirability of these trends. The polarization of this debate into “win/lose” narratives raises the question of whether, and under what conditions, the logic of capital accumulation driving farmland acquisition and investment can engender broad‐based social benefits akin to “shared growth.” This paper sheds light on this question through a detailed look at the recent expansion of Zambia Sugar's Nakambala Estate in Mazabuka, Zambia. We explore outcomes linked to two of the most prominent pathways through which social benefits are said to accrue: smallholder incorporation and employment. Findings demonstrate the unevenness of outcomes linked to both pathways, with the concrete benefits both claimed and observed through some measures quickly eroding under the weight of alternative performance metrics. The unevenness produced by the intensification of capitalist relations is manifested not just between those differentially positioned with respect to the incoming investment (“outgrower,” “employee,” and “land loser”) but within each of those conditions. This ambiguity opens spaces for competing representations of the promises and pitfalls of these processes, while highlighting the shaky ground on which shared growth and inclusive business agendas stand.     

基于自然资本投资观的林业长线及短线投资分析

森林作为一种自然资本,其资本的属性要求其价值的增值,这就需要对森林自然资本的投资。在拓展了宏观投资资本结构内涵的基础上,对中国林业的自然资本投资与人造资本投资、一般自然资本投资与关键自然资本投资进行了比较。根据实证研究,从1998年以来,自然资本投资比重远高于人造资本投资比重;关键自然资本投资比重也远高于一般自然资本投资比重。这样的投资符合林业定位的转变。针对我国森林自然资本投资中出现的问题,提出短线投资的对策是将直接投资和间接投资分别由不同的工程来承担;长线投资的对策是引入生态购买,将生态购买与生态补偿作为森林自然资本长线投资的两种手段。     

衔接过渡期扶贫资产差异化治理研究

扶贫资产的衍生主要与扶贫行为和扶贫资金投入相关。根据资金投入领域的不同,扶贫资产进一步分化为政府资产、村集体资产、贫困户家庭资产及组合型资产等。由于资产类型的多样化,"差异化治理"成为实现扶贫资产有效治理的重要保障。应从晰化产权主体、细化责任主体、优化管理方式、活化资产使用、具化收益分配入手,推进扶贫资产差异化治理,确保治理有效。     

Capital market imperfections in economic transition: empirical evidence from Ukrainian agriculture

This article investigates the link between financing and investment in Ukrainian agriculture during economic transition. The main contribution of the study is to provide empirical evidence for the coexistence of financial constraints and soft budget constraints (SBCs). This is of particular importance because credit constraints and SBCs have completely different economic effects. The lack of differentiation between these forms of capital market imperfections yields overlapping effects of financing on investment and may therefore cause a misinterpretation of econometric results. Our empirical analyses are based on an econometric estimation of the Euler investment equations for 529 large farms from three Ukrainian regions between 2001 and 2005. The results confirm that financial variables significantly influence farms' investment, providing empirical evidence of an imperfect capital market in Ukrainian agriculture. It turns out that credit constraints in the Ukrainian agricultural sector are more important than SBCs. We show that the estimated level of financial constraints for profitable farms with access to loans is higher if both types of capital market imperfections are appropriately distinguished.     

衔接过渡期扶贫资产差异化治理研究

扶贫资产的衍生主要与扶贫行为和扶贫资金投入相关。根据资金投入领域的不同,扶贫资产进一步分化为政府资产、村集体资产、贫困户家庭资产及组合型资产等。由于资产类型的多样化,"差异化治理"成为实现扶贫资产有效治理的重要保障。应从晰化产权主体、细化责任主体、优化管理方式、活化资产使用、具化收益分配入手,推进扶贫资产差异化治理,确保治理有效。     

基于PLS模型的中国林业产值影响因素分析

利用1994～2007年关于中国林业投入与产出的相关数据,采用偏最小二乘回归法,对影响中国林业产出的诸种投入因素进行研究。实证研究发现:中国林业产出主要受林业固定资产投资、林业基本建设投资和林业从业人员人数以及从业人员年均工资等投入因素的影响;且各种投入影响因素对林业第一、二、三产业的影响程度存在差异。为此,建议:保持林业投入适度增长,加大对林业劳动力的教育和培训力度,增强其再就业能力;加强林业固定资产投资和林业基本建设投资,尤其是营林固定资产投资和森工基本建设投资;借助林权制度改革,多渠道拓宽就业途径,以促进林业劳动力向第三产业转移。     

Biodiversity Conservation and Productivity in Intensive Agricultural Systems

This paper explores the economic effects of biodiversity loss on marketable agricultural output for intensive agricultural systems, which require an increasing level of artificial capital inputs. A theoretical bio‐economic model is used to derive a hypothesis about the effect of the state of biodiversity on the optimal crop output both in the longer run and in the transitional path towards the steady‐state equilibrium. The hypothesised positive relationship between biodiversity stock and optimal levels of crop output is empirically tested using a stochastic production frontier approach, based on data from a panel of UK specialised cereal farms for the period 1989–2000. The results support the theoretical hypothesis. Increases in biodiversity can lead to a continual outward shift in the output frontier (although at a decreasing rate), controlling for the relevant set of labour and capital inputs. Agricultural transition towards biodiversity conservation may be consistent with an increase in crop output in already biodiversity‐poor modern agricultural landscapes.