Utilising farm-level panel data to estimate climate change impacts and adaptation potentials

We combine farm accounting data with high-resolution meteorological data, and climate scenarios to estimate climate change impacts and adaptation potentials at the farm level. To do so, we adapt the seminal model of Moore and Lobell (2014) who applied panel data econometrics to data aggregated from the farm to the regional (subnational) level. We discuss and empirically investigate the advantages and challenges of applying such models to farm-level data, including issues of endogeneity of explanatory variables, heterogeneity of farm responses to weather shocks, measurement errors in meteorological variables, and aggregation bias. Empirical investigations into these issues reveal that endogeneity due to measurement errors in temperature and precipitation variables, as well as heterogeneous responses of farms toward climate change may be problematic. Moreover, depending on how data are aggregated, results differ substantially compared to farm-level analysis. Based on data from Austria and two climate scenarios (Effective Measures and High Emission) for 2040, we estimate that the profits of farms will decline, on average, by 4.4% (Effective Measures) and 10% (High Emission). Adaptation options help to considerably ameliorate the adverse situation under both scenarios. Our results reinforce the need for mitigation and adaptation to climate change.     

Farm Type Effects of an EU‐wide Direct Payment Harmonisation

In this study, we analyse how three scenarios involving different levels of harmonisation of common agricultural policy (CAP) decoupled payments in the EU affect the distribution of farm income across regions and farm types. We use the farm type extension of the common agricultural policy impact (CAPRI) model, which captures farm heterogeneity across the EU. The first scenario (NUTS1) assumes uniform per‐hectare payments at the NUTS1 level. The second scenario (MS‐CONV) equalises the per‐hectare rates inside each Member State (MS) and partially harmonises the single payment scheme (SPS) across MS in line with the 2011 Commission proposal. The third scenario simulates a uniform per‐hectare payment at the EU level. Depending on the implementation of the SPS, the NUTS1 flat rate induces a substantial redistribution of payments across farm types and NUTS2 regions, particularly in regions that apply the historical SPS. The MS‐CONV and EU flat‐rate schemes have more significant impacts at the EU‐wide level. In the EU‐15, almost all farms lose payments from MS‐CONV and EU‐wide flat rates, whereas in the EU‐10, almost all farm types gain from these scenarios. Our conservative estimates indicate that the flat‐rate payments could redistribute up to €8.5 billion. Lower land rental costs partially offset the losses of farm income in the EU‐15 from payment redistribution. Land rents drop for all flat‐rate scenarios across most sectors and farm sizes in the EU‐15. In the less productive new MS, the landowners’ rental income is largely unaffected by the introduction of the flat rate.     

Institutional innovation and policy support to facilitate small‐scale farming transformation in China

While the Asian food economy has been experiencing significant transitions, it is widely believed that little transformation has occurred in farm land operation. However, the recent rapid emergence of middle and large‐size farms in many regions of China is striking, as is the increase in size of operational units. The overall goal of this article is to understand small‐scale farm transformation in China based on a unique dataset surveyed in Northeast and North China. The results show that the institutional innovation through establishing land transfer service centers to promote land rental markets and reduce transaction costs, policy support to speed up land consolidation, and farm mechanization services are major driving forces in the recent evolution of China's farm operations. The article concludes with policy implications on small‐scale farming transformation in China and the rest of world and identifies research issues for further study.     

Off‐farm work and technical efficiency on U.S. dairies

In this study, we investigate the impact of an increase in farm households’ off‐farm work on technical efficiency (TE) of U.S. dairies. We present a theoretical framework that implies that an increase in farm household off‐farm work decreases TE. We use two nationally‐representative samples of U.S. dairies (2010 and 2005 Agricultural Resource Management Surveys) and a parametric approach (stochastic frontier analysis) to empirically test the hypothesis. Results are generally consistent with the hypothesis and show that an increase in off‐farm work by the farm household is associated with a significant decrease in TE. In addition, results show that there is a statistically significant difference in TE between small, medium, and large farms. Small farms are associated with significantly higher off‐farm work and have lower TE than large farms, which implies that less off‐farm work by households with larger farms is at least partially responsible for the evidence of economies of scale in the U.S. dairy industry.     

Are medium‐scale farms driving agricultural transformation in sub‐Saharan Africa?

This study presents evidence of profound farm‐level transformation in parts of sub‐Saharan Africa, identifies major sources of dynamism in the sector, and proposes an updated typology of farms that reflects the evolving nature of African agriculture. Repeat waves of national survey data are used to examine changes in crop production and marketed output by farm size. Between the first and most recent surveys (generally covering 6 to 10 years), the share of national marketed crop output value accounted for by medium‐scale farms rose in Zambia from 23% to 42%, in Tanzania from 17% to 36%, and in Nigeria from 7% to 18%. The share of land under medium‐scale farms is not rising in densely populated countries such as Kenya, Uganda, and Rwanda, where land scarcity is impeding the pace of medium‐scale farm acquisitions. Medium‐scale farmers are a diverse group, reflecting distinct entry pathways into agriculture, encouraged by the rapid development of land rental, purchase, and long‐term lease markets. The rise of medium‐scale farms is affecting the region in diverse ways that are difficult to generalize. Findings indicate that these farms can be a dynamic driver of agricultural transformation but this does not reduce the importance of maintaining a clear commitment to supporting smallholder farms. Strengthening land tenure security of local rural people to maintain land rights and support productivity investments by smallholder households remains crucial.     

What Drives Marginal Abatement Costs of Greenhouse Gases on Dairy Farms? A Meta‐modelling Approach

This paper examines the relationships between the marginal abatement costs (MAC) of greenhouse gas (GHG) emissions on dairy farms and factors such as herd size, milk yield and available farm labour, on the one hand, and prices, GHG indicators and GHG reduction levels, on the other. A two‐stage Heckman procedure is used to estimate these relationships from a systematically designed set of simulations with a highly detailed mixed integer bio‐economic farm‐level model. The resulting meta‐models are then used to analyse how MAC vary across farm‐level conditions and GHG measures. We find that simpler GHG indicators lead to significantly higher MAC, and that MAC strongly increase beyond a 1–5% emission reduction, depending on farm attributes and the chosen indicator. MAC decrease rapidly with increasing farm size, but the effect levels off beyond a herd size of 40 cows. As expected, the main factors driving gross margins per dairy cow also significantly influence mitigation costs. Our results indicate high variability of MAC on real life farms. In contrast to time consuming simulations with the complex mixed integer bio‐economic programming model, the meta‐models allow the distribution of MAC in a farm population to be efficiently derived and thus could be used to upscale to regional or sector level.     

A supply‐side analysis of agritourism: Evidence from farm‐level agriculture census data in Taiwan

Due to consumers’ increased demand for leisure and farmers’ need for income diversification, researchers and policymakers have significant interest in topics related to agritourism. This study provides a supply‐side analysis on agritourism using Taiwan as a case study. Utilising a sample of 720,148 family farms from the 2010 agriculture census survey in Taiwan, we quantify the effects of engaging in the agritourism business on farm income, on farm succession, and on family members’ labour supply decisions between on‐farm and off‐farm work. An analytical framework that combines the doubly robustness regression model and semiparametric estimation is proposed to address the endogeneity bias. Results indicate that participation in agritourism increases farm income and family farm succession. Farms engaging in agritourism also have more family members working on the farm, and fewer family members working off‐farm, compared to farms not engaging in agritourism. Although agritourism enterprises are developed to meet consumers’ demand for leisure, our results show that they also improve the economic welfare of farm households.     

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.     

Incorporating risk in a positive mathematical programming framework: a dual approach

In this study we develop a new methodological proposal to incorporate risk into a farm‐level positive mathematical programming (PMP) model. We estimate simultaneously the farm nonlinear cost function and a farmer‐specific coefficient of absolute risk aversion as well as the resource shadow prices. The model is applied to a sample of representative arable crop farms from the Emilia‐Romagna region in Italy. The estimation results confirm the calibration ability of the model and reveal the values of the individual risk aversion coefficients. We use the model to simulate different scenarios of crop price volatility, in order to explore the potential risk management role of an agri‐environmental scheme.     

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.     

Farm Size,Technology Adoption and Agricultural Trade Reform: Evidence from Canada

Using detailed census data covering over 30,000 farms in Alberta, Saskatchewan and Manitoba, Canada, we document the vast and increasing farm size heterogeneity, and analyse the role of farm size in adapting to the removal of an export subsidy in 1995. Consistent with the Alchian-Allen hypothesis, the increase in per-unit trade costs due to the reform was associated with farms of all sizes shifting their production of crops from low value wheat to higher value canola. We find that switching to new labour-saving tillage technologies and away from summerfallow in response to the large negative shock to grain prices caused by the reform varied across the farm size distribution. We develop a theory of heterogenous farms and technology adoption that can explain our findings.     

我国家庭农场发展的现状、问题及培育建议——基于农业部专项调查343万个样本数据

[目的]家庭农场作为一种新型农业经营主体,近年来受到国家的大力支持。对其发展情况进行调查分析有助于发现其存在问题,尽早提出解决措施,优化家庭农场的发展和培育。[方法]文章以农业部家庭农场专项调查数据为基础,从经营数量、经营规模、经营类型、经营效益4个方面,对家庭农场的发展现状进行了分析。[结果]家庭农场发展迅速,且增长速度逐年加快;目前已基本实现规模经营,其中70%的土地来自土地流转;农场数量和规模南北差异较大;经营类型以种植业为主,占六成以上;家庭农场的年销售产值高,但净利润低。除此之外,由于处在探索发展阶段,我国家庭农场在发展过程中面临着生产成本过高、质量认证缺乏和资金支持少等问题。[结论]最后针对这些问题,从加大政策扶持力度、加快农产品品牌建设和加强金融支持3方面提出对策建议,以期为未来家庭农场的培育提供参考价值。     

Off‐farm work,land tenancy contracts and investment in soil conservation measures in rural Pakistan

This study examines the impacts of participation in off‐farm work and land tenancy contracts on the intensity of investment in soil‐improving measures and farm productivity. A multivariate Tobit model that accounts for potential endogeneity between the intensity of investment and the off‐farm work and tenancy contract variables is estimated for 341 rural households in Punjab province of Pakistan. An instrumental variable approach is also used to analyse the impact of tenancy contract and off‐farm work on farm productivity. The empirical results show that participation in off‐farm work and tenure security tends to increase the intensity of investment in long‐term soil‐improving measures. We also find that increases in off‐farm work and tenure security exert significant and positive effects on farm productivity.     

The Incidence of EU Per‐Hectare Payments on Farmland Rental Rates: A Spatial Econometric Analysis of German Farm‐Level Data

This article analyses determinants for 2001 farmland rental prices from 3,819 farms in Germany. Based on specification tests we estimate a general spatial model to account for both spatial relationships among rental prices of neighbouring farmers and spatially autocorrelated error terms. A €1 per hectare higher rental price in a farmer’s neighbourhood coincides with a €0.72 higher rental price paid by the farmer. The marginal incidence of EU per‐hectare payments paid for eligible arable crop land on rental rates amounts to €0.38 for each additional €1 of premium payments. Regional livestock density, which is indirectly influenced by different policies, is also a major determinant of rental prices. Results are confirmed by sensitivity analyses. Consequently, German farmland rental rates are heavily influenced by agricultural policy instruments and therefore, these policies exhibit substantial distributional effects.     

我国家庭农场发展现状及其对策研究

家庭农场是在我国农村现有基础上建立的,是新型的农业生产主体,是实行农业现代化的金钥匙。家庭农场的出现,既增加农民的收入,又可以实现农业生产的产业化。文章运用文献分析和实地调研相结合的研究方法,分析了当前我国家庭农场的发展现状,即我国家庭农场呈现出经营规模不同、经营品种不同、经营效益较好、具有市场竞争力等明显特征。家庭农场的发展面临大好机遇,但是也存在土地产权认识不明晰、资金短缺、劳动力缺乏等瓶颈问题。并提出明确家庭农场认定标准、引导土地向家庭农场流转、农民的技术培训、完善农业保险、政府给予一定的资金政策等建议,旨在为各地区制定发展家庭农场政策提供参考。     

Patterns in Technical Efficiency and Technical Change at the Farm‐level in England and Wales, 1982–2002

English and Welsh farm‐level survey data are employed to estimate stochastic frontier production functions for eight different farm types (cereal, dairy, sheep, beef, poultry, pigs, general cropping and mixed) for the period 1982 to 2002. Differences in the relative efficiency of farms are explored by the simultaneous estimation of a model of technical inefficiency effects. The analysis shows that, generally, farms of all types are relatively efficient with a large proportion of farms operating close to the production frontier. However, whilst the frontier farms of all types are becoming more efficient through time because of technical change, it is also the case that the efficiency of the average farm for most farm types is increasing at a slower rate. In addition, annual mean levels of efficiency for most farm types have declined between 1982 and 2002. The factors that consistently appear to have a statistically significant effect on differences in efficiency between farms are: farm or herd size, farm debt ratios, farmer age, levels of specialisation and ownership status.     

Do family farms really converge to a uniform size? The role of unobserved farm efficiency*

We analyse the growth of family farms in Israeli cooperative villages during a period of economic turmoil. We use instrumental variables to account for the endogeneity of initial farm size, and correct for selectivity as a result of farm survival. We also include a technical efficiency index, derived from the estimation of a stochastic frontier production model, as an explanatory variable. Our aim is to check whether ignoring efficiency could have been the reason for convergence results obtained elsewhere in the literature. We found that technical efficiency is an important determinant of farm growth, and that not controlling for technical efficiency could seriously bias the results. In particular, larger farms are found to grow faster over time, while without controlling for technical efficiency the farm growth process seemed to be independent of initial farm size. The increasing polarisation of farm sizes in Israel has ramifications for the inefficiencies induced by the historical quota system, for the political power of the farm sector and for the social stability of farm communities.     

How drought affects the financial characteristics of Australian farm businesses

The financial performance of 240 farms in a drought‐affected agricultural region of Australia is analysed. The decadal study period included some years of widespread drought, as well as years with only subregional droughts or no drought. Some droughts created larger adverse financial impacts than others. Mostly, the more droughts farms experienced, the worse was their financial performance relative to farms within the same quantile of farm performance. Despite the incidence of drought, by the end of the decade, almost all the farm businesses were wealthier from increasing their farm size and becoming more crop dominant. Unexpectedly, consecutive years of drought had a significant positive effect on the operating profit per hectare and retained profit per hectare of farms in a majority of their respective quantiles. Many farms that experienced consecutive drought were forced to make structural changes, shifting away from livestock production towards additional cropping. These structural changes boosted farm performance over the decade. The incidence of drought affected some measures of farm performance differently whilst others were affected similarly. Understanding these metrics of farm performance and the structural changes underway in an agricultural region helps form a more complete view of drought impacts.     

What farmer types are most likely to adopt joint venture farm business structures?

Joint venture (JV) farm structures have the potential to increase the productivity and profitability of traditional family farms. However, such structures are not widely adopted within the farm business community. Furthermore, knowledge on the relative attractiveness of different JV models to farmers is limited. We use a choice experiment to explore what JV structures are preferred by Australian farmers, and how farmers’ socio‐demographic and attitudinal characteristics influence the type of JV structure preferred. A latent class analysis revealed significant unobserved preference heterogeneity amongst the population. We identify four latent classes that differ in their preferences regarding the number of JV partners, access to new machinery, and/or the opportunity for additional annual leave. All classes of farmers displayed positive preferences for operational decision‐making with other JV partners, although they varied in their preferences towards final operational responsibility. The diversity in preferences shows that there is no ‘one size fits all’ JV design, leaving opportunities for a range of JV decision models. Such flexibility in JV design is likely to have advantages when seeking JV partners, with a significant proportion of the sampled population open to collaborative decision‐making models.     

Tactical responses to seasonal conditions in whole-farm planning in Western Australia

In dryland agricultural systems, efficient farm management requires a degree of flexibility according to variations in climate from year to year. Tactical adjustments to the mix of farm enterprises can capitalize on good growing conditions and minimise losses under poor growing conditions. In this paper, a discrete stochastic programming model of dryland wheat-sheep farms in Western Australia is used to identify optimal tactical adjustments to climate and to calculate the value of these tactical adjustments. The model, MUDAS, includes nine discrete season types with a wide range of options for tactical adjustments in each. In the standard model, optimal tactical responses increase expected net cash surplus by approximately 22% relative to a fixed or inflexible strategy. In most season types, changes to the long term farm strategy are made on less than 10% of the farm area, although in some seasons over 25% of the farm can require adjustments to the enterprise selected. The benefits of flexibility are not evenly distributed across different season types but occur predominantly in the best and worst seasons. The magnitude of benefits is affected differently by different commodity prices. Benefits of flexibility are due to capitalizing on knowledge about the greater volatility of profits from cropping than from livestock production. Deterministic models and even stochastic models which don't include activities for tactical adjustments miss this key feature of the system.