Policy drivers of farm succession and inheritance

Farm succession and inheritance is increasingly considered a complex phenomenon which not only affects core dimensions of farm family life but also the agricultural sector more widely. Intergenerational farm transfer in particular is increasingly viewed as fundamental to the sustainability and development of global agriculture. In the majority of EU countries, the average age of farmers is increasing, while the number of farmers under 40 years of age is decreasing. There is growing concern that this demographic trend may have negative impacts on the agricultural industry because it is younger and not older farmers who are associated with more efficient and effective production practices. The question of what motivates decisions to transfer farms is a complex one, and research to date has not apparently enlightened agricultural policy to the extent that current trends towards an ageing farm population are being managed. This research aims to investigate economic and financial aspects of the policy drivers of farm succession and inheritance in Ireland to understand what it is about the policy environment that is failing to stimulate higher levels of farm transfer. It draws on the Teagasc National Farm Survey data which provides Irish data to the Farm Accountancy Data Network in the European Commission. A hypothetical microsimulation model is used to investigate economic factors of farm transfers, with scenarios created to test these factors and their impacts on the transfer process. The Net Present Value (NPV) of income streams for farmers and their successors are calculated to assess which scenarios have the highest/lowest financial effects. The findings illustrate a range of possible scenarios for farm succession/inheritance, with some results indicating that under current policy retaining a farm until death may be more economically beneficial to a farmer than transferring land before death.     

Analysing behavioural differences of farm households: An example of income diversification strategies based on European farm survey data

Different forms of income diversification represent important strategies of farmers to either cope with the changing economic framework conditions or to valorise given territorial potentialities. Nevertheless, the decision to diversify economic activities on or off the farm will heavily depend on the agricultural business and household characteristics. Our study used a survey of 2154 farms from eleven European regions to identify distinct farm types in order to investigate differences regarding the willingness to diversify in the future. Two scenario situations with continuation (baseline) and without any market intervention (“No CAP”) were tested. A factor and cluster analysis depicted six farm types both previously described and novel. The typology proved validity across all case studies, whereas single types occurred more frequently under specific site conditions. The six farm types showed strong variations in the stated future diversification behaviour. Young farm households with organic production are most likely to diversify activities particularly on-farm, whereas farm types characterised by intensive livestock holding and also already diversified and part-time farm households are least likely to apply this strategy. Results have further shown that under hypothetical conditions of termination of economic support by the Common Agricultural Policy (CAP) an increasing share of farmers – throughout all types – would apply income diversification, mainly off-farm diversification, as a survival strategy.     

Farm technical and environmental efficiency and subsidy redistribution in Ireland: A simulation approach of possible performance and equity effects

We investigate the relationship between EU Common Agricultural Policy environmental payments, and dairy and beef farm level competitiveness and environmental performance. We use an Irish panel of farm level financial data for the years 2000–2017 and apply stochastic frontier analysis. Our estimates identify a positive relationship between technical efficiency and the Green, Low-Carbon, Agri-Environment Scheme for dairy farms, in contrast with the negative relation identified for previous payments of this kind such as the Rural Environment Protection Scheme for both beef and dairy. We then simulate increases in the first type of environmental payments financed through reductions in decoupled payments. We use alternative scenarios for payment redistribution such as flat allocation, allocation to farms with low stocking rates or proportional reallocation of payments. We find that under the second scenario, marginal environmental gains can potentially be achieved for dairy farms. For beef farms, the proportional allocation performs best regarding environmental gains. We also find that under this scenario, the impacts on income inequality can be smoothed for both farm types.     

Analysis of the spatial relationship between small olive farms to increase their competitiveness through cooperation

Small olive farms typically find it hard to compete with their larger competitors due to unfavourable conditions in terms of labour costs, land fragmentation and structural capital. These conditions result in higher production costs that reduce their competitiveness, leading to progressive exclusion from domestic and international markets and the abandonment of farming. In this scenario, cooperation between farmers to increase farm size and reduce land fragmentation may be an innovative strategy to improve the competitiveness of small agricultural holdings and avoid farm abandonment. The aim of this paper is to characterize the spatial structure of the traditional olive grove in the province of Jaén (South of Spain), the world’s leading olive oil producer, to identify the areas where farmer cooperation can be effectively implemented. The results of this study confirm that there are large numbers of small, barely viable olive groves and show different ways to promote cooperation between farmers according to the structural characteristics of their farms and their spatial relationships. In particular, when small olive farms have large neighbours, assisted cooperation systems should be implemented, while when small olive farms are concentrated in areas without larger farms, shared cultivation systems would be more efficient. This paper also provides information for the design of public policies aimed at enhancing the competitiveness of small agricultural holdings.     

Examining the relationship between farm size and productive efficiency: a Bayesian directional distance function approach

Achieving sustainable food security and increased farm income will depend on how efficient production systems are in converting available inputs to produce outputs. Using data from Malawi, we estimate a Bayesian directional technology distance function to examine the relationship between farm size and technical efficiency. Our results support the existence of an inverse relationship between farm size and productive efficiency, where small farms are more efficient than large farms. On average, farms exhibit inefficiency levels of 60%, suggesting that productivity could be improved substantially. Improving productive efficiency and food security will require farms to operate in ways where the size of cultivated area is matched by nonland production inputs such as labor, fertilizer, and improved seeds. The results highlight the need for policies that could incentivize farmers to adopt productivity‐enhancing technologies and, where possible, to allocate excess land to lease markets.     

Who Receives Farm Government Payments?

If we do not systematically attempt to collect data and assess distributional impacts, we shall always be surprised by the many unintended consequences of our public decisions. (Bonnen 1969, p. 447) Direct government payments to farmers have tripled in the last half of the 1980s. Market price support programs (for example, the Western Grain Transportation Act, among others) and supply management regulation continue to be topics of debate among policy analysts. Certainly the debate has become intensified by the discussions surrounding the Canada-U.S. Trade Agreement and the Uruguay Round of talks under the General Agreement on Tariffs and Trade. When all census farms are distributed across gross sales classes, the “selected” programs included in this study tend to be more concentrated among the mid-sized farms than are aggregate gross sales. However, if one considers Prairie grain farms distributed across farm size classes measured in terms of grain acres, gross sales, net farm income (specifically, NCFIWF) and the net “benefits” of “selected” government programs are similarly concentrated. For example, Prairie farms with 320 to 599 acres of grain report 24% to 26% of each of these four items.²⁶ The “selected” programs included in this study tend to pay about the same size of payout per farm household, regardless of the size of household income. We obtain this result because farm size in terms of gross farm sales tends to be the same, regardless of the size of household total net income. Across the spectrum of farm financial stability classes, the net “benefit” of the “selected” programs in this study tend to be distributed similarly to gross farm sales. The results depend on exactly how one implements the classification but more than two thirds of gross sales and more than two thirds of net “benefits” of “selected” programs accrue to farms with a higher level of financial stability. Across the spectrum of rates of return on equity as an indicator of farm efficiency, about one third of gross sales and one third of net “benefits” of “ selected” programs accrue to farms with a rate of return on equity of 10% or more. The potential impact of deregulation of supply management depends on one‘ s assumption. Three scenarios are presented here and, in each case, both “winners” and “losers” are identified. Between 4% and 37% of households on farms with quota would move from above to below the Statistics Canada low-income cutoff (LICO), depending on the scenario under consideration. However, in each seen-ario, there are cases of households moving from below to above LICO as a result of our calculated impact of deregulating supply management. This paper takes its lead from Bonnen's observation about “unintended consequences.” We do not offer an “evaluation” of any government program. Our sole objective is to illustrate “distributional impacts” so that all individuals in the policy debate may speak from an informed perspective. This paper represents an initial step in developing an “informed perspective.” As the first note to this paper indicates, an important ancillary objective is to illustrate the potential of Statistics Canada databases to provide tabulations to answer specific Questions posed by researchers and policy analysts.     

Revealing the determinants of wheat yields in the Siberian breadbasket of Russia with Bayesian networks

Higher crop yields are critical to satisfy the rising global food demand. Russia holds untapped potential for increasing agricultural production because current grain yields are often far below the potentially attainable yields. Western Siberia is an important breadbasket in Russia, where wheat yields fall particularly short of their potential. Our goal was to assess the determinants of yield variations among farmers in the province of Altai Krai in Western Siberia. We conducted 67 structured in-person interviews with corporate farm managers and individual farmers about the potential determinants of wheat yields and complemented these data with 149 additional observations obtained from the provincial agricultural extension service. We used Bayesian networks (BNs) to represent the relationships between the explanatory parameters and contemporary wheat yields and to examine qualitative future scenarios of future yields. The results revealed higher yields on larger farms than on medium and small farms. Our results corroborated that the application of fertilizers and herbicides and the implementation of new equipment had large positive impacts on the yields. The scenario of higher future production costs and lower precipitation resulted in a yield reduction from 7.6 dt/ha to 5.3. Overall, our results suggest that policies aimed at increasing wheat yields should concentrate on the education of farmers and encourage higher input applications, particularly for small-scale farms. Additionally, policies should address concurrent challenges, such as a higher drought frequency, through the application of new equipment, seed material and tillage practices.     

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.     

Farm-scale ecological and economic impacts of agricultural change in the uplands

Recent decades have witnessed substantial losses of biodiversity in Europe, partly driven by the ecological changes associated with intensification of agricultural production. These changes have particularly affected avian (bird) diversity in marginal areas such as the uplands of the UK. Future trends for upland birds will likely be impacted by changes in agricultural support regimes, such as those currently envisaged in on-going reforms of the Common Agricultural Policy. We developed integrated ecological-economic models, using seven different indicators of biodiversity based on avian species richness and individual bird densities. The models represent six different types of farms which are typical for the UK uplands, and were used to assess the outcomes of different agricultural futures. Our results show that the impacts of these future agricultural scenarios on farm incomes, land use and biodiversity are very diverse across policy scenarios and farm types. Moreover, each policy scenario produces un-equal distributions of farm income changes and gains and losses in alternative biodiversity indicators. This shows that generalisations of the effects of policy and pricing changes on farm incomes, land uses and biodiversity can be misleading. Our results also suggest that a focus on umbrella species or biodiversity indicators (such as total species richness) can miss important compositional effects.     

Why small farms persist? The influence of farmers’ characteristics on farm growth and development. The case of smaller dairy farmers in NZ

Human capital is an important resource in primary production impacting on farmers’ decisions and actions. Given their current and expected economic environment, farmers must use their human capital in mapping out a trajectory for their farm. This study considers particular aspects of farmers’ human capital and its influence on farm growth, or lack of it. Farmers’ characteristics as expressed through their personality, intelligence and objectives are the main human capital aspects considered in a sample of smaller NZ dairy farms. They are somewhat typical of western farmers working on smaller farms. They can be broadly classed into Expanders, Maintainers and Retractors. It is hypothesised each group will have distinct and different personal characteristics and these influence the farmers’ choice of trajectory. This is in addition to purely economic factors. It is also hypothesised the characteristics influence the farmers’ choice of development strategy and how challenges to the strategy are viewed. The data collected from the small dairy farms support the hypotheses suggesting the design of policy and extension programs must allow for these human capital drivers. Using past data, it is also shown aspects of human capital are different in large farms emphasising the same conclusion.     

Will future land based food and fibre production be in family or corporate hands? An analysis of farm land ownership and governance considering farmer characteristics as choice drivers. The New Zealand case

Family farming in various guises has been the dominant ownership and governance system in primary production over recorded history. This outcome has been controlled by farmers and their families, possibly due to tradition, opportunities, personal characteristics, skill sets and the nature of primary production. Of these, it is hypothesised that the farmers’ personal characteristics play a major part in the choice, and continuance, of current ownership and governance systems. Equally as important, they, and therefore the land ownership system, play a part in the efficiency of production systems and improvement of the biological and production environment.The benefits and difficulties of commonly used ownership systems in Western society are reviewed. Using a sample of New Zealand (NZ) farms, a comparison of the managers’ features for owner/operator, partnership and corporate based systems is presented. There were significant differences in many variables including the farmers’ age, education, number of children, asset levels, years on the current farm, and similar, but more importantly, the farmers in the ownership system groups had differing personal characteristics. Significantly, despite the corporate based farms employing more professional assistance, the profit levels were similar across ownership systems leaving the farmers’ characteristics the main factors correlating with system choice. However, governance systems per se are only marginally correlated with production systems and efficiency.As successive generations of farmers are unlikely to have different characteristics, and corporate based systems continue to exhibit similar profit levels, relatively simple family based systems will continue to dominate farm land ownership and control. The trends suggest family farms will increase in size and involve family conglomerates facilitating the management of larger, and in many cases multiple, farms. While currently there are few differences in biological efficiency between ownership systems, given the efficiency benefits of size and scale, this could well change with the increase of family conglomerates. Relative to increasing corporatisation, the continuance of family based ownership and governance will also be of benefit to the environment. When developing land policies, these highlighted relationships should be taken into account. This study is a first to consider personal characteristics relative to ownership.     

家庭农场、农民创业与制度环境相关性研究

通过对学术界相关研究文献进行梳理可知,当前对家庭农场的研究多基于微观经济组织视角,将农民创业与家庭农场结合的研究尚属空白;此外,还存在对家庭农场及农民创业制度环境定义模糊、对农民创业及家庭农场制度环境的定量研究较为缺乏等不足.从创业经济学视角研究家庭农场发展以及对家庭农场型创业制度环境进行定量分析可成为理论与实践研究的重要方向。     

Farmers in a deregulated dairy regime: Insights from Ireland's New Entrants Scheme

While the impending review of the European Union (EU) Common Agricultural Policy (CAP) is set to have an impact on all farming sectors across Europe, particularly transformative change is sought by policies relating to dairy farmers. EU milk quota abolition in 2015 will fundamentally revise the terms of dairy production, transitioning from policies of subsidy and protection to a scenario where farmers will produce milk on the open market. Dairy quota abolition essentially represents an economic but also socio-cultural disruption for a sizeable cohort of farmers, requiring adaptation to more market-driven production strategies. Agricultural policy-makers in EU member states are demonstrably preparing for this imminent change and dairy farmers are considering and strategising their responses at farm-level. Our focus in this paper is the interplay between quota abolition and farm-level decision-making in the pre-abolition period. Drawing from a broader mixed-methodological and multi-disciplinary research project, this paper uses qualitative narrative analysis to identify the key determinants arising in dairy farmers’ decision-making processes. How are farmers currently strategising their responses to dairy quota deregulation? Using the qualitative Biographic Narrative Interpretive Method (BNIM), we examine the range of factors determining how a particular group of dairy farmers are strategising their positions on the impending open dairy market. Our analysis highlights how, in the advent of a deregulated dairy production regime, dairy farmers are carefully deliberating their responses at farm level, drawing from policy and market related information, their own personal speculations, and conventional wisdom shared with other members of the farming community. We find that the dairy farmers are influenced not only by motivations to increase productivity and scale but by a tenacious approach to farm sustainability and resilience that is informed by past experiences of farming and seeks to preserve and promote socio-cultural farming values. The paper is of particular interest to policy makers and academics interested in the interchange between policy and farmer behaviour, particularly in the context of current CAP reform.     

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.     

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.     

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.     

Productivity and farm size in Australian agriculture: reinvestigating the returns to scale

A positive relationship between farm size and farm productivity is often considered to be largely due to increasing returns to scale in farm production. However, using farm‐level data for the Australian broadacre industry, we found that constant or mildly decreasing returns to scale is the more typical scenario. In this study, the marginal returns to various farm inputs are compared across farms with different sizes. We found that large farms achieved higher productivity by changing production technology rather than increasing scale alone. The results highlight the disparity between ‘returns to scale’ and ‘returns to size’ in the industry, suggesting that productivity improvement among smaller farms can be made through increasing their ability to access advanced technologies, rather than simply expanding their scale.     

Farm productivity in Rwanda: effects of farm size,erosion, and soil conservation investments

This paper examines the effects of farm size, soil erosion, and soil conservation investments on land and labor productivity and allocative efficiency in Rwanda. There were several key results. First, there is a strong inverse relationship between farm size and land productivity, and the opposite for labor productivity. For smaller farms, there is evidence of allocative inefficiency in use of land and labor, probably due to factor market access constraints. Second, farms with greater investment in soil conservation have much better land productivity than average. Those with very eroded soils do much worse than average. Smaller farms are not more eroded than larger farms, but have twice the soil conservation investments. Third, land productivity benefits substantially from perennial cash crops, and the gains to shifting to cash crops are highest for those with low erosion and high use of fertilizer and organic matter. Program and policy effort to encourage and enable farmers to make soil conservation investments, to use fertilizer and organic matter, and to participate in cash cropping of perennials will have big payoffs in productivity. Land markets that allow smaller farmers to buy land could also increase aggregate productivity.     

China’s Agricultural Policy Transition: Impacts of Recent Reforms and Future Scenarios

This article reviews recent developments in China’s agricultural domestic support policy, especially the transition from taxing farmers and agriculture to providing direct subsidies to grain production and purchased inputs. A model‐based quantitative analysis on the effects of these policy changes is presented. Simulation results suggest that recent policy changes have achieved the declared policy goals of increasing grain production and boosting farm income. Much of the increase in grain production and farm income can be attributed to higher per unit return to arable land, land reallocation to grain production and extra agricultural employment triggered by the policy changes. Based on the assumption that China’s public assistance to agriculture and farmers will continue and rise, two hypothetical future scenarios are simulated. Using all the support permitted under WTO de minimis limits with existing instruments, China’s policy will increase grain production, change trade patterns seemingly contrary to China’s comparative advantage, increase rural employment and significantly increase farm income (by more than 12%). If, however, decoupled instruments are applied to raise China’s agricultural domestic support to the same level, China’s agricultural production and trade will remain unchanged, rural employment remain stable, but farm income will be increased by nearly 15%.     

Impact of farm management diversity on the environmental and economic performance of the wheat–maize cropping system in the North China Plain

To assess the attainable greenhouse gas (GHG) mitigation potential from crop production in China's most important grain production region, the North China Plain (NCP), single farm environmental and economic performances of 65 winter wheat–summer maize (WW–SM) producing households were determined. The results revealed a huge heterogeneity among farms, with up to five times higher environmental impact of worst compared to best performing farms. Astonishingly no trade-off between productivity and sustainability could be identified in the region, with high-yield farms emitting no different amounts of GHGs per hectare compared to low-yield farms. Building on cluster analysis, with farms grouped according to their economic and environmental performance into ‘poor’, ‘fair' and ‘good’ producers, the regional GHG mitigation potential was estimated. Under the scenario assumption that all grain in the NCP is produced under ‘good’ production conditions, 21% and 7% of GHG could be mitigated in wheat and maize production, respectively. The study shows that in the NCP, exemplary for China's rapidly developing agricultural sector, the crop management skills of a substantial share of farmers could obviously not keep pace with the massive input intensification. Among others, farmer–farmer trainings are recommended to close the gap in crop production performance among producers.