Changing Patterns in Family Farming: The Case of the Pampa Region, Argentina

In the past few decades, Argentine agriculture has been significantly reorganized. Changes include the marked growth of export production, the need for an increasing level of capital investment and technological incorporation into farms and the restructuring of public intervention. This paper examines the dynamics of farm exit and the adjustments made by capitalized family farmers in the Pampa region. We suggest transformations in family farms are the result of a substantial shift in their main characteristics which historically combined the use of family labour, a certain accumulation capacity and ownership status. In particular, we will discuss the different and changing patterns of farm operations and the adjustments made with respect to work and land tenure.     

Variations in Farm Performance in Transitional Economies: Evidence from the Czech Republic1

This paper revisits the literature on farm restructuring in the CEECs by analysing the variations in farm performance in the Czech Republic a decade after the start of the transition process. It identifies seven clusters of farms that differ in their productivity and profitability usng data from 1998 and 1999. The analysis reveals that the vast majority of farms are unprofitable, and there is no strong evidence that individual farms perform better than corporate farms. In fact, there are large numbers of individual farms that are loss‐making on their agricultural activity with low factor productivity. Producer co‐operatives and limited liability companies suffer from debts inherited from the reform process. Future restructuring is likely to occur in all clusters rather than affecting just corporate farms.     

Does individualization help productivity of transition agriculture?

There are large differences across transition countries with respect to agricultural‐sector performance and corresponding scope of farm restructuring and shift to individual farming. In this article we analyze the impact of individualization on productivity growth within an augmented neoclassical growth model framework. This approach allows us to circumvent criticisms on the grounds of lack of theoretical and objective criteria for inclusion of explanatory variables. Furthermore, in the empirical analysis using a panel data covering 15 transition countries over the period 1990–2001 and applying a generalized method of moments with instrumental variable estimator we are able to control for the impact of various factors and the potential endogeneity of variables. Our estimation results are robust and support the view that the shift to individual farming, as well as the overall economic reforms, has positively contributed to the productivity growth in agriculture during the first decade of transition.     

Transition to smallholder agriculture in Central Asia

The article reviews the development of smallholder farming in Central Asia's former Soviet republics. One of the striking features of the agricultural transition in Central Asia (and Commonwealth of Independent States [CIS] in general) is the dramatic shift, since 1992, from the predominance of large corporate farms to individual or family agriculture based on a spectrum of small farms. Evidence shows that individualization of agriculture is associated with the observed posttransition recovery in Central Asia (and in CIS in general) and that small family farms outperform the large enterprises. This clashes with the traditional philosophy of economies of scale and with the inherited view of small family farms as an undesirable aberration. We discuss the policies that helped smallholder farms in Kazakhstan, Kyrgyzstan, and Tajikistan and severely restricted their growth and development in Uzbekistan and especially Turkmenistan.     

The Source of Productivity Growth in Dutch Agriculture: A Perspective from Finance

In corporate finance, the impact of capital structure on firm performance has been widely studied. This article extends the capital structure study to the situation in agriculture, explicitly addressing the difference between family farms and corporate firms. We use the Malmquist productivity growth index as a proxy for performance to study the impact of capital structure (debt) on farm performance. We compare the results with those from the traditional performance model that uses profitability (e.g., return on equity (ROE)) as performance measure. Using data from Dutch arable farms, results show that debt has no effect on ROE, whereas it has a positive effect on productivity growth.     

Herd Growth,Farm Organisation and Subsidies in the Dairy Sector of Russia and Kazakhstan

Initially taken as a template for farm restructuring after the demise of collective agriculture, the ‘Western family farm model’ has taken root in the former Soviet countries only belatedly and incompletely. We examine dairy structures in Russia and Kazakhstan and analyse the drivers of recent herd growth. We are specifically interested in the role of farm management and organisation, vertical integration, and the role of policy. Regression analysis based on a sample of 180 randomly selected commercial dairy farms, using an innovative simultaneous equation framework, shows that better herd management and access to milk marketing contracts were more effective in stimulating herd growth than current subsidy payments. We do not find evidence that milking plants belonging to corporate entities or even supra‐regional agroholdings grow more substantially than medium‐sized individual farms. Twenty‐five years after the end of central planning, structural change among commercial dairy farms in Russia and Kazakhstan appears similar in many ways to the patterns observed in the West more recently: smaller farms catch up in terms of herd growth and classical family‐run operations coexist with or even emulate vertically integrated agribusinesses based on hired labour. In moving toward this ‘new normal’ of farming structures, commercial dairy farms in Russia may even be a few steps ahead of their Western counterparts. At the same time, the still sizeable but stagnating group of subsistence producers in rural households finds no equivalent in the West.     

The economic role of Russia's subsistence agriculture in the transition process

In this article, we analyze the role of subsistence‐oriented agriculture in Russia in the 1990s. We start out by discussing the diverging economic effects of the growth of subsistence agriculture in Russia since the transition process started. The quantitative analysis of this sector's role is carried out by means of an applied computable general equilibrium (CGE) model applying a 1994 social accounting matrix (SAM) as base year data. The novelty of the article is to disaggregate primary agricultural production not by products but by farm types, which enables us to distinguish their institutional and economic characteristics. The model also explicitly differentiates between marketed and subsistence consumption or formal and informal marketing activities of agricultural producers. We simulate two ex post and two ex ante experiments. The results of the first backward‐looking experiment highlight that Russia's subsistence agriculture was an important buffer against further agricultural output declines during transition and, hence, against food insecurity. A simulation, which looks into the effects of a devaluation of the Russian ruble, shows that the financial crisis should have increased the relative competitiveness particularly of large‐scale crop farms versus small‐scale farms. Two forward‐looking experiments indicate that efficiency enhancing institutional change would benefit both large‐scale and small‐scale farms. However, within small‐scale agriculture, a shift from subsistence to commercial agriculture would take place.     

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.     

Factors affecting farm growth intentions of family farms in mountain regions: Empirical evidence for Central Switzerland

Family farms in mountain regions are undergoing a progressive structural change and an ongoing shift in the allocation of production factors land, capital and labor. In Switzerland, various policy measures influence the re-allocation of these production factors. To understand the effectiveness of these schemes and to assess future farm structural change, it is useful to analyze the underlying drivers which support and hinder the emergence of individual farm growth strategies. We study the family farms’ growth intentions using a logistic regression model based on a combination of census and survey data on family characteristics from two mountain case study regions in Central Switzerland. Factors supporting farm growth intentions are the relative change in farm size in recent years, farm related sunk costs, farm diversification and farm size. We found no support for the hypothesis that farm growth intention is also influenced by the perceived personal situation represented by indicators for the perceived workload, psychological stress and financial problems. In addition, off-farm labor did not prevent farmers from stating growth intentions. Our empirical findings suggest that (i) the most important factors which support farm growth intentions correspond with factors driving observed patterns of structural change; (ii) limited availability of family labor may result in a new critical threshold for farm growth strategies; (iii) aims and non-pecuniary preferences of farmers will impede a rapid structural change in the near future.     

On the nature and magnitude of cost economies in hog production

In this article, we assess the impact of farm size on production cost and evaluate the marginal costs and margins by considering that input prices may change with the scale of production. By using French hog farm data, we estimate a system of equations including a feed price function, input demand functions, and an output supply function based on a technology approximated by a combined generalized Leontief‐Quadratic form. Our results suggest that the marginal costs are over‐estimated when the adjustment of the feed unit prices to a change in farm size is not controlled for. More specifically, the cost economies for large farms (enjoying the highest profits) arise primarily from lower feed prices, with technological scale economies having little impact. In contrast, farms with no hired labor exhibit technological scale economies and reach higher price‐cost margins compared to larger farms.     

Off‐farm labor market decisions and agricultural shocks among rural households in Kenya

Using household level data from rural Kenya, this article explores whether and how farm households respond to unfavorable agricultural production environments, including any ex post adjustments in off‐farm labor supply in response to unexpected weather shocks. While controlling for a wide range of educational, demographic, and other locational factors, we examine how long‐term weather conditions and specific rainfall shocks influence a household's decision to engage in, and their earnings from, the off‐farm labor market. We find that rural households engage in off‐farm work as a long‐term strategy to deal with the effects of anticipated weather conditions on their farming operations. The analysis does not reveal major short‐term adjustments in off‐farm engagement as a result of specific, unexpected rainfall shocks; these households do however rely on remittance income and petty agricultural wage labor under these circumstances. Holding other factors constant, and conditional on participation, households in areas with a more productive local agriculture tend to earn more from off‐farm work especially in the informal/business sector than their counterparts in regions with a less productive agriculture. As expected, a vibrant local economy in the form of public investment increases the probability of off‐farm participation.     

Outsourcing and efficiency: the case of Spanish citrus farming

Outsourcing in agriculture has traditionally been seen as a managerial strategy of smaller farms to achieve higher levels of efficiency. In this article, we provide empirical evidence supporting the existence of a positive relationship between outsourcing and efficiency in Spanish citrus farming. Outsourcing is measured by the proportion of outsourced labor and capital in farms' total use of these production factors, i.e., the higher the proportion of outsourced inputs, the higher the degree of outsourcing. Making use of data envelopment analysis techniques, we compute input‐specific reductions required to achieve technical efficiency at the farm level. Our results show that attainment of technical efficiency leads to a reduction in the use of both farms' own and outsourced production factors. Furthermore, the degree of outsourcing increases as farms move to their technically efficient productive plans. In addition, outsourcing labor and capital allows farms to achieve efficiency regardless of their size. In our view, this result has a clear implication for policy makers. Instead of trying to improve Spanish citrus farms' competitiveness by pursuing an increase of their average size, policy measures should be adopted to enhance farmers' managerial skills and the efficiency of those external service firms and co‐operatives that are effectively performing basic cultivation tasks.     

Is there a future for small farms in developed countries? Evidence from the French case

This research aims to identify the specific characteristics of small farms in developed countries and the factors that influence their survival and growth. Using the case of France, we employ statistical and econometric analysis of data from the Farm Structure Survey (N = 70,000) for the period 2000–2007. The principal findings suggest that small farms are no more likely than other farms to employ “alternative” strategies to the predominant model of increasing farm size, nor are they more likely to diversify on‐farm activities or operate under quality‐labeled production systems, with the notable exception of organic agriculture. However, where small farms do adopt or practice these activities, they are seen to have a favorable effect in ensuring their survival and growth. In contrast, we are unable to conclude that pluriactivity of farm households has a positive impact on the survival of small enterprises. The effect of geographical location on small farms is largely expressed in their concentration in mountainous or disadvantaged regions. Overall, the trajectory of small farms is marked by farm exit, principally as the result of farmers retiring at the end of their careers. The small farm sector is also revitalized by both larger farms declining and thus being reclassified as small farms, as well as the progressive entry into agriculture of small farm holders whose income was previously derived largely off‐farm.     

FACTOR SHARES IN AGRICULTURE: THE CANADA-U.S. EXPERIENCE

The class shares of income in the Canadian economy and public policy developments are closely related. A comparison of the levels and trends in functional income shares with those in the United States economy generates a number of testable hypotheses. In this paper, the functional shares in all Canadian agriculture and agricultural regions are also observed and compared to US. agriculture and adjacent type of fanning regions.
The analysis indicates a marked similarity in the total economy income shares despite dissimilar factor supply functions. In both countries there has been a slight upward trend in the labor share over time. The rate and pattern of growth has also been similar in the two countries; however, a serious divergence has developed in recent years. In contrast to the total economies, declining farm labor income shares characterize both agricultures. Real estate shares also have followed a similar pattern in the two countries, with the past two decades witnessing a reversal in the historical decline. Nevertheless, there are a number of differences between factor shares in Canadian and United States agriculture. In part, these can be explained by comparing adjacent regions. It is clear, however, that the different impact of technological change and economic growth has bad a great impact on regional shares. The operation of capital and labor markets within Canadian agriculture also contribute to the differences in agricultural factor shares between the two countries.     

Net capital outflows and the viability of family farms

Abstract

The importance of the family farm in EC agriculture is undisputed. This paper focuses upon the potential impact on family farms of capital outflows which arise from the Napoleonic Code inheritance system which is in place in many continental countries. This system implies that the transfer of ownership of the farm between generations is typically associated with a requirement for the successor to buy out the non‐succeeding heirs. The potential effects of these capital outflows on the family farm's current consumption and ability to pass on a viable unit to the next generation is illustrated using two versions of a life cycle simulation model using two definitions of what constitutes future family farm viability. The numerical results give some indication of the extra burden imposed by the Napoleonic Code inheritance system relative to primogeniture.     

The Influence of Labor Price Change on Agricultural Machinery Usage in Chinese Agriculture

The substitution between rural labor and machinery has been a key determinant of farm production, structure, and efficiency in most developed countries and is expected to play a key role in shaping the future of Chinese agriculture. Using disaggregated farm‐level data from Hebei and Shandong provinces of China, we calculated the Allen and Morishima elasticities of substitution between labor and machinery. These elasticities were based on seemingly unrelated regressions and three‐stage least squares estimates of the translog cost function and input cost share functions. In contrast to previous studies, we dissaggregate machinery inputs into three categories: large, medium, and small. In addition, the issue of endogeneity in output quantity and input prices is also addressed. The results show strong evidence of substitution between labor and the three categories of machinery inputs. The findings also support substitution among the three categories of machinery themselves.     

Smallholder agriculture in transition economies

In this paper, we analyse how smallholder farms have evolved during the transition process in former communist countries and how this process has differed across countries and commodities. The role of smallholders in agriculture differs among transition countries, and this diversity is due to a combination of factors, including capital, labour and land endowments, income levels, scale economies, market imperfections, and reform choices. Institutions to access inputs and sell outputs affect the efficiency and survival of smallholders. In the past decade, the share of smallholders in land use and production has declined significantly as younger and more dynamic smallholders have become integrated in modern value chains, whereas older, less dynamic farmers have (semi‐)retired, producing only for household consumption.     

Participation in contract farming and farm performance: Insights from cashew farmers in Ghana

The global demand for cashew nuts continues to increase steadily. However, many African countries face difficulties in marketing and adding value to the product. Using recent survey data of 391 cashew farmers in Ghana, this paper contributes to the growing evidence on the significance of contract farming (CF) in improving the welfare of rural households in developing countries. Specifically, the paper analyzes the factors that influence cashew farmers’ decisions to participate in CF, and the impact of participation on farmers’ performance. We employ a recently developed switching regression model with endogenous explanatory variables and endogenous switching to control for selection bias caused by observable and unobservable factors. The empirical results show that participation in CF significantly increases labor productivity and price margins, as well as cashew yields, and net revenues. A disaggregated analysis of the sample into farm size categories reveals that small‐sized cashew farms tend to benefit more through CF, compared to medium‐ and large‐sized farms.     

Africa's changing farm size distribution patterns: the rise of medium‐scale farms

This study assesses changes over the past decade in the farm size distributions of Ghana, Kenya, Tanzania, and Zambia, drawing on two or more waves of nationally representative population‐based and/or area‐based surveys. Analysis indicates that much of Sub‐Saharan Africa is experiencing major changes in farm land ownership patterns. Among all farms below 100 hectares in size, the share of land on small‐scale holdings under five hectares has declined except in Kenya. Medium‐scale farms (defined here as farm holdings between 5 and 100 hectares) account for a rising share of total farmland, especially in the 10–100 hectare range where the number of these farms is growing especially rapidly. Medium‐scale farms control roughly 20% of total farmland in Kenya, 32% in Ghana, 39% in Tanzania, and over 50% in Zambia. The numbers of such farms are also growing very rapidly, except in Kenya. We also conducted detailed life history surveys of medium‐scale farmers in each of these four countries and found that the rapid rise of medium‐scale holdings in most cases reflects increased interest in land by urban‐based professionals or influential rural people. About half of these farmers obtained their land later in life, financed by nonfarm income. The rise of medium‐scale farms is affecting the region in diverse ways that are difficult to generalize. Many such farms are a source of dynamism, technical change, and commercialization of African agriculture. However, medium‐scale land acquisitions may exacerbate land scarcity in rural areas and constrain the rate of growth in the number of small‐scale farm holdings. Medium‐scale farmers tend to dominate farm lobby groups and influence agricultural policies and public expenditures to agriculture in their favor. Nationally representative Demographic and Health Survey (DHS) data from six countries (Ghana, Kenya, Malawi, Rwanda, Tanzania, and Zambia) show that urban households own 5–35% of total agricultural land and that this share is rising in all countries where DHS surveys were repeated. This suggests a new and hitherto unrecognized channel by which medium‐scale farmers may be altering the strength and location of agricultural growth and employment multipliers between rural and urban areas. Given current trends, medium‐scale farms are likely to soon become the dominant scale of farming in many African countries.     

The economics of land fragmentation in the north of Vietnam*

Land fragmentation, where a single farm has a number of parcels of land, is a common feature of agriculture in many countries, especially in developing countries. In Vietnam, land fragmentation is common, especially in the north. For the whole country, there are about 75 million parcels of land, an average of seven to eight plots per farm household. Such fragmentation can be seen to have negative and positive benefits for farm households and the community generally. Comparative statics analysis and analysis of survey data have led to the conclusion that small‐sized farms are likely to be more fragmented, and that fragmentation had a negative impact on crop productivity and increased family labour use and other money expenses. Policies which allow the appropriate opportunity cost of labour to be reflected at the farm level may provide appropriate incentives to trigger farm size change and land consolidation. Policies which tip the benefits in favour of fewer and larger plots, such as strong and effective research and development, an active extension system and strong administrative management, may also lead to land consolidation.