Promoting structural adjustment in agriculture: The economics of New Entrant Schemes for farmers

We examine the efficacy of incentives for new entrants to farming as an alternative to early retirement schemes for farmers. We briefly review previous studies on the effectiveness of Farmer Early Retirement Schemes in promoting structural adjustment in agriculture and conclude that the economic case for these schemes seems weak. We then employ a dynamic farm optimisation model, incorporating a realistic specification of farmer decision-making, on an original Northern Irish dataset to analyse ex ante the possible impacts of New Entrant Schemes. We find a more positive potential impact from these schemes, particularly the option of an interest rate subsidy on farm development loans. This is attributed to the dynamic effects of the farm investments associated with such schemes, a likely reflection of the long-term effects of differences in age related lifecycle goals. Younger farmers have a longer planning horizon and tend to invest more heavily in business growth than comparable older age groups.