The influence of diversification on long-term viability of the agricultural sector

We estimate the impact of diversification on the performance of farm businesses using measures of economic viability among farms in Scotland and Sweden. We derive indicators of viability using national level accounting surveys for the period 2000–2012 and account for short-term and long-term effects within our estimates of viability.A higher proportion of Scottish farms emerge as being more short-term and long-term viable than Swedish farms. This could, we propose, be due to emphasis on enhancing farm viability within Scottish planning for rural development, compared to Sweden which emphasized productivity and environmental enhancement. Moreover, for both countries the trend in viability is relatively stable until 2007, when both panels begin to display the impact of policy and market change.Findings based on a multinomial logistic regression indicate that farms which run additional ventures outside traditional agriculture, and are diversified in the sense that they obtain revenue from two or more agricultural enterprises, are more viable compared to specialized agricultural units. Other factors which affect viability were found to be structural, biophysical and institutional, specifically the reform of the Common Agricultural Policy (CAP) in 2003. However the significance and magnitude of these effects differ across the two countries. Consequently, these results seem to imply the importance of emphasizing non-specialized agricultural activities within rural development policy and, moreover, informs the rationale behind proposed redistributions of CAP payments.     

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.     

A comparative multidimensional evaluation of conservation agriculture systems: A case study from a Mediterranean area of Southern Italy

To avoid the current paradoxes of the global agro-food system it is necessary to define and implement a viable agricultural sustainable model, combining satisfaction of food needs and land preservation. A possible solution can be found in a holistic production system consistent with a sustainable development model, designed to satisfy diverse “local” economies. The conservation agriculture (CA) could be a part of this model, as it includes a set of best practices available to preserve agrarian soil and its biodiversity. Briefly, we cover the CA background in Europe followed by the evaluation of its impact in terms of private/public interest, using the sustainability’s metric.To test the viability of a model based on CA in “local conditions”, we compare economic performance of different conservation practices (i.e. minimum and no tillage) to that of conventional agriculture in a typical Mediterranean environment – Collina Materana – in Southern Italy (Basilicata region). Our findings suggest that: i) CA can actually be a viable alternative to conventional systems; ii) in Mediterranean agricultural areas CA has yield advantages especially during dry years, when conservation techniques increase water supply to crops; iii) public support is needed to direct farming choices in fact without financial incentives these practices would be not widely accepted and diffused; iv) European policy makers have to recognized the positive benefits of CA and pay them as ecosystem services in the framework of Good Agricultural Environmental Conditions and the present CAP subsidies.     

SOURCES OF EXPORT EARNINGS INSTABILITY: THE ROLE OF AGRICULTURE

Previous studies of export earnings for less developed countries have suggested that earnings from primary products — including agriculture — might be more stable than those from industrial goods. Those studies used highly aggregated sectors, so that individual agricultural sectors could not be identified as stable or not. This study measures the export earnings instability of 20 commodity aggregates — more than half of them agricultural — for 27 countries between 1962 and 1983. The results indicate that some agricultural sectors were unstable and that no individual sector was universally stable. Agricultural sectors tended to be among the more stable sectors in low and middle income countries and among the less stable sectors in high income countries.     

International diffusion of gains from biotechnology and the European Union's Common Agricultural Policy

This paper analyses the impact of adopting or rejecting genetically modified (GM) crops in the European Union, taking into account the EU Common Agricultural Policy (CAP). In this paper the productivity impact of genetically modified organisms (GMOs) differs across crops, taking factor biased technology change into account. The transfer of knowledge across countries is modelled as a process of endogenous knowledge spill-overs. Analysis with a multi-region applied general equilibrium model shows that the CAP protects farm income and production despite non-adoption of the more productive GM crops in the EU. The EU will forgo substantial benefits in terms of economic welfare if it bans GM imports.     

Investing in Bulgarian Agriculture Investir dans l’agriculture bulgare Investitionen in die bulgarische Landwirtschaft

Investing in Bulgarian Agriculture The Programme for European Development of Bulgaria has set agricultural development as a basis for economic growth. The first strategic objective of the Programme is to make agriculture an attractive industry and to guarantee a high standard of living for people working in the sector by stabilising and increasing their incomes. The priorities of the Bulgarian government regarding agriculture follow the priorities of the Common Agricultural Policy (CAP) and we strictly adhere to the two pillars of the CAP. A Food Safety Agency is being established to guarantee the safety and increase the quality of food and a legislative base is being created to allow producers to supply directly to consumers thus enhancing market opportunities. Bulgaria is in the middle of the first programming period of the Rural Development Programme (2007–2013) and expectations of the programme are high. It has the largest budget in Bulgaria and the fund absorption rate of about 20 per cent is the highest in the country. Bulgarian government priorities are consistently focused on the goal of increasing the competitiveness of Bulgarian agriculture through technical and technological modernization of the sector and on the sustainable development and stabilization of rural areas under the conditions of EU membership.     

CAP and Advisory Services: From Farm Advisory Systems to Innovation Support

Farm advisory services have become an important topic in the Common Agricultural Policy (CAP) of the European Union (EU). The aim of this article is to draw lessons from the implementation of the regulation and measures of the current 2014–2022 CAP in knowledge transfer and advisory services to contribute to debates about the future of farm advisory policies. Findings are based on two studies commissioned by the European Commission: an evaluation study implemented by a consortium of consultancies and researchers and a comparative analysis implemented in the frame of the H2020 research project AgriLink. The article first provides a historical perspective of the ‘knowledge and advice’ dimension of the CAP since 2007. We show a gradual transition towards greater flexibility of measures supporting innovation and knowledge flows. The professional status of farm advisors across European countries was more strongly acknowledged, offering new life-long training opportunities to advisors. However, the implementation of CAP’s advisory measures remains complex. As a result, the effects of these measures have been rather limited, with only few farmers reached overall. Fostering an inclusiveness of these measures remains an ongoing challenge for policymakers.     

Standing at the Crossroads – the Future of a Strong Common Agricultural Policy is at Stake A la croisée des chemins – l’avenir d’une politique agricole commune forte est en jeu Am Scheideweg – die Zukunft einer starken Gemeinsamen Agrarpolitik steht auf dem Spiel

Standing at the Crossroads – the Future of a Strong Common Agricultural Policy is at Stake The issues and targets in the European Union’s agenda are largely in line with Hungarian objectives; job creation for example is one of the main targets of the Europe 2020 strategy and also of the Hungarian Government. Hungary’s development and competitiveness are linked to the internal development and global competitiveness of the European Union; and so our primary objective is to strengthen the integration process and to obtain a strong Common Agricultural Policy. The CAP has reached the highest level of integration among EU policies and its original objectives have been reinforced by the Lisbon Treaty. Europe needs a strong and common agricultural policy beyond 2013; the main task of agriculture will be to ensure the security of food supplies. The future success of the CAP requires appropriate financial support to secure future targets. Rural development has already become an integral part of the CAP structure; but rural areas will not be viable without an evolving agriculture. Without the provision of a proper level of income subsidies many farms would be forced to stop production. CAP adjustments should promote the catching up of new Member States and eliminate the current system of direct subsidies that disadvantage the new members.     

National policies and the sectoral pattern of economic growth

This article presents tests of whether the kinds of "national" policy variables used to explain cross-country variation in the growth of aggregate GDP per capita can also successfully explain per capita growth in the agricultural and nonagricultural sectors of developing countries. There are four main results of interest. First, relative to nonagriculture, convergence is much slower in agriculture and the burden of population growth is generally much higher. Second, while orthodox economic policies share positive associations with economic growth in the nonagricultural sectors of developing countries, such policies fail to robustly predict variation in agricultural growth. Third, size of government indicators often yield an "unexpected" positive association with agricultural growth. And finally, although there is some evidence that fewer price controls are associated with faster agricultural growth, these associations are statistically quite weak and quantitatively quite small.     

CAP Subsidies and Productivity of the EU Farms

The paper investigates the impact of the Common Agricultural Policy (CAP) subsidies on farm total factor productivity (TFP) in the European Union (EU). We employ a structural semi‐parametric estimation algorithm directly incorporating the effect of subsidies into a model of unobserved productivity. We empirically study the effects using the Farm Accountancy Data Network (FADN) samples for the EU‐15 countries. Our main findings are clear: subsidies impact negatively on farm productivity in the period before the decoupling reform was implemented; after decoupling the effect of subsidies on productivity is more nuanced and in several countries it turned positive.     

A Computable General Equilibrium Analysis of Agricultural Liberalisation: The Uruguay Round and Common Agricultural Policy Reform

This paper uses a computable general equilibrium model to assess the effects of the Uruguay Round (UR) and CAP reform. Detailed attention is given to the impact of the agricultural components of the UR and of the CAP reform on the agricultural and food-processing sectors of the EU. The CGE model used, while based on the standard Global Trade Analysis Project (GTAP) model, uses a more detailed representation of the UR and CAP policy changes than is usual in GTAP analyses of the UR effects. In so doing it assumes a degree of specificity of factors used in agriculture and makes appropriate agricultural policy variables endogenous. Finally, it assesses the consequences of assuming imperfect competition in all non-agricultural sectors.     

FAMILY AND EMPLOYMENT IN AGRICULTURE: RECENT CHANGES IN FRANCE

This paper examines changes which have occurred in agricultural employment in France during the last two decades. It focuses on family employment since nowadays farm families provide more than half of the labour supply of the industry, as in nearly all the developed countries. The reasons behind the variation in the annual rate of decline in agricultural employment are split into two sets of factors: alterations in the age structure of the farm population, and modifications in the tendency to enter and leave farming in each age group. In respect of the later, the varied consequences of the occurrence of the economic crisis are discussed, together with the effects of deep sociological changes, especially in the relationships between members of the farm family.     

The trade distorting effects of export refunds: The case of beef exports to Africa

The usual sale of European agricultural products to Africa using export refunds has been heavily discussed in recent decades. At the centre of the discussion are the consequences on the agricultural producers in Western and Southern Africa. There are two different points of view: On the one hand, the European Union's (EU) export policy reduces the prices on these markets and relieves high burdens on local producers; on the other hand are claims that refunds do not influence local prices significantly. Hence, the Common Agricultural Policy (CAP) has no effect on markets of third countries, besides depressing world market prices. This paper focuses on the effects of EU's export subsidies for beef exports on its market share in several developing countries. Twenty-seven African countries were analysed using a fixed-effects model between 1988 and 2000. The results clearly show a highly significant positive impact of the export refund rate on the market and the import share. With its export policy, the EU raises its market position and edges out other competitors.     

Multi-scale assessment and spatial modelling of agricultural land abandonment in a European peripheral region: Galicia (Spain), 1956-2004

The environmental, cultural and economic consequences of land use change, including abandonment of agricultural use, have been recognized for a long time. It has often been assumed that the transformations of the agricultural systems in developed countries (and particularly in Europe) took place, for the main part, in the immediate years after the Second World War. In this paper we present a review of different statistical and cartographic sources available for a peripheral region in Europe (Galicia, Spain) characterized by small-scale farming and a very fragmented property system, that suggests otherwise: modernization of agriculture apparently took place without major changes in agricultural area until the country gained access to the European Economic Community, and the effect of Common Agricultural Policy reforms during the decade of 1990 is suggested as a major driver for the net decrease of agricultural area in the region between 1956 and 2004. On the other hand, this paper emphasizes the spatial complexity of agricultural abandonment with a case study, showing a large degree of variability at municipal scale and thus the need of future EU-level projects to work at least at municipal (Local Administrative Units 2, LAU 2) level. Finally, a multinomial logistic model for observed changes is included that shows how biophysical limitations were the main drivers behind abandonment of agriculture at parcel scale, while structural qualities related to property structure were strongly associated to the incorporation of former shrublands to agricultural use. Besides, Farm Structure Surveys were revealed as an unreliable source for the assessment of changes in total agricultural area in the studied region.     

U.S. National Economic Contribution of Generic Food and Agricultural Product Advertising

Agricultural promotion groups (APGs) promote the economic welfare of agricultural producers by financing generic advertising and promotion activities intended to expand demand for their commodities in hopes that the benefits will more than cover the cost. A review of the most recent evaluations of 27 major U.S. APG generic advertising and promotion programs conducted by many different researchers using widely different techniques concludes that that those programs have effectively enhanced the profits of their respective stakeholders and generated high rates of returns to the dollars invested in those programs. Importantly, this study finds that the success of those programs in supporting and growing their respective sectors of agriculture has spilled over to the general economy. The programs have created an important multiplier effect through the economy. In the process, jobs have been created; income has been generated; and economic growth has occurred.     

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.     

Defining and delivering ‘sustainable’ agriculture in the UK after Brexit: interdisciplinary lessons from experiences of agricultural reform

Defining and achieving sustainability in the context of complex, multi-scale, and constantly changing agricultural systems is a challenge for research and policy. In UK agriculture, the European Union and its Common Agricultural Policy has been a key source of funding for and approaches to sustainability in the agriculture and rural development sectors. The decision to leave the European Union represents a significant moment in UK agriculture and rural development policy, and both an opportunity and responsibility for the UK government to set out and commit towards achieving sustainability goals for the sector. In this study, a combination of ethnographic case study research, focusing on the case of upland farmers in the Yorkshire Dales, policy analysis and national agricultural sector data is referred to in describing experiences of agricultural policy reform over recent decades. From these experiences, lessons for the design and delivery of future agriculture and rural development are drawn out. It is argued that the integrated assessment of multiple sources of knowledge can provide a means to critically reflecting on evidence about sustainability in complex systems, better understanding trade-offs, and creating a more complete and inclusive knowledge base from which to define sustainable agriculture.     

Changing land use intensity in Europe – Recent processes in selected case studies

In recent decades the intensification of agricultural production in many European countries has been one of the key components of land-use change. The impact of agricultural intensification varies according to national and local contexts and a greater understanding of the drivers of intensification will help to mitigate against its negative impacts and harness potential benefits. This paper analyses changes in land use intensity in six case studies in Europe. A total of 437 landowners were interviewed and their responses were analysed in relation to changes in land use intensity and agricultural production between 2001 and 2011. In the case studies in Western and Eastern Europe we observed stabilisation during the last decade, and no clear tendency of increase or decrease of land use intensity. The use of fertilizers and pesticides seems to have decreased in our cases in Western Europe, which is contrary to trends in Eastern Europe. Agricultural production remained stable in almost all cases, except for an increase in Austria and Romania which may indicate that the farming efficiency has increased. A statistical analysis showed a division between study areas in Romania and Austria (increasing land use intensity) versus those in the Netherlands, Denmark and Greece (decreasing). In the Mediterranean cases we observe a process where agriculture is becoming increasingly marginalised, at the same time as changes in function with regard to urbanisation and recreational land uses have taken place. Logistic regression highlighted the importance of farm size and farmer type in understanding changes in land use intensity. The dominant pattern of stabilisation which has occurred over the past 10 years may also partly be a result of effective EU and national environmental and agricultural policies, which are increasingly concerned with improving environmental conditions in rural areas.     

Similarities and dissimilarities between the EU agricultural and rural development model and Romanian agriculture. Challenges and perspectives

The main aims of this study are to highlight the differences and the similarities between the European model of agricultural and rural development, and the state of play in the Romanian agricultural sector. Statistically speaking, the agricultural sector's indicators of the past two decades place Romania outside the family picture of the EU countries, with very slight resemblances, and very strong discrepancies between their economic, technical, and institutional characteristics. At present, competition-wise, farming and farmers in Romania are still strongly disfavoured in relation to their competitors in the old EU Member States. In Romania, the economic and institutional mechanisms have most often been devised to the disadvantage of agricultural production, by claiming that subsistence farming would be the sustainable way, and by channelling the added value to other sectors. An option to continue the agricultural policies of the past decades and to abandon the national support lent to agriculture would be particularly risky through its unpredictable and incalculable social and economic effects.