Future-proofing the farm: On-farm wind turbine development in farm business decision-making

The European Union is committed to increasing the renewable energy produced and consumed within its territory, creating an opportunity and demand for renewable energy production on agricultural land. In this paper, Ajzen's theory of planned behaviour (TPB) is utilised to structure qualitative research on the role of renewable energy production in farm business decision-making, through a case study in North East Scotland. Qualitative interviews were undertaken with 23 farmers who had pursued wind energy production, and a further nine key informants. It is found that farmers undertake wind energy production primarily to ‘future proof’ their farms, increasing the long-term economic viability of their farms through business diversification and profitable capital investment. Although environmental considerations were not the primary consideration in turbine development, respondents recognised the energy dependence of farming and the depletion of world energy resources, including these issues in their rationales. The primary obstacles to turbine development focused around economic risks and transaction costs, which some respondents moderated by reducing turbine size or renting land to developers, thus increasing their ‘perceived behavioural control’. Relationships between intention and behaviour are thus found to be multi-directional. The authors argue that on-farm renewable energy production could lead to increased environmental awareness among farmers (and thus more economically and environmentally sustainable agricultural practices), as well as providing a potential economic boost for local economies, but that these opportunities are at risk of being co-opted by large-scale energy companies, which are better able to negotiate the growing complexities and risks of turbine development.     

Industry and migration of farm workers

Globalization has changed economic realities. First, the competences of multinational enterprises (MNEs) are becoming increasingly mobile and knowledge-intensive. MNEs thus give more attention to the availability and quality of the created assets of alternative locations. Second, among developing countries there are now considerable differences between the catching-up countries (e.g. newly industrialized countries) and falling behind , less developed countries. These developments have helped change the opportunity sets of both MNEs and host countries. Foreign direct investment (FDI)-based development strategies are now commonplace among less developed countries, but there is also increased competition for the right kinds of investment. In general, the balance in bargaining power has shifted in favour of the MNE, and less developed countries increasingly need to provide unique, non-replicable created assets to maintain a successful FDI-assisted development strategy.     

Farm machinery use,off‐farm employment and farm performance in China

We analyse the joint impacts of farm machinery use and off‐farm employment on maize yields and agrochemical expenses from a household survey of 493 farmers in China. Our findings are obtained from an innovative two‐stage econometric procedure that combines a bivariate ordered probit model with an endogeneity‐corrected ordinary least square regression model. The results show that farmers are jointly making decisions to use farm machines and to work off the farm and that these two household activities affect maize yields and agrochemical expenses in different ways. We show that farm machinery use significantly increases both maize yields and agrochemical expenses, while off‐farm employment significantly decreases agrochemical expenses. Our findings highlight the importance of additional machinery use in increasing farm production; the need to account for possible endogeneity in estimation; and the statistical significance of key household characteristics (gender, education, and household size) on overall farm production.     

Unspoken demands for farm technology

For three years in Bolivia (2002–2005) the INNOVA Project finished researching several technologies for sustainable agriculture, started by earlier DFID-funded projects. Before INNOVA started critics suggested that these technologies should be discarded in favour of a demand survey. Instead, INNOVA kept the existing technologies, but judged the demand for them with several methods (CIAL, sondeo technology fair, and others). INNOVA found that there was demand for some of the technologies, but that a survey would have missed much of the demand, which is implicit. That is, people are not initially aware of all their problems or of all the possible solutions. Over the years, farmers made more specific, sophisticated demands on the technologies, which evolved as a result. Demand and supply of farm technology are like two sides of an unfolding conversation.     

Interrelated labor decisions of farm couples: a censored response analysis of off‐farm work

Farm couples' labor market responses are partly the discrete choice of entering the off‐farm labor market and partly the continuous choice of off‐farm working hours, given entry. Such a setting is interesting when examining the increasing occurrence of multiple job‐holdings among farmers in Western economies. Most existing analyses of off‐farm labor supply only model the decisions of the farmer, not the joint decisions of the farm couple. This article presents a framework for handling such interrelated discrete/continuous choices, involving also farm production and household consumption. The derived two‐equation sub‐model for husband/wife's censored labor responses is estimated from a 10‐year Norwegian panel data for 342 farms. The results agree to some extent with earlier studies, but are more informative because of the longer panels—which allows a more extensive examination of latent heterogeneity and behavioral persistence—because it provides cross‐effects in the spouses' labor supplies. The results show some interesting differences between how the independent variables influence the labor supply of operator and spouse. This is most evident for the cross‐effects of education, children, and wage rate. Overall, the results strongly support applying a panel‐censoring model that accounts for latent heterogeneity in this context.     

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.     

The impact of farm credit in Pakistan

Both informal and formal loans matter in agriculture. However, formal lenders provide many more production loans than informal lenders, often at a cost (mostly loan default cost) higher than what they can recover. For example, the Agricultural Development Bank of Pakistan (ADBP), providing about 90% of formal loans in rural areas, incurs high loan default costs. Yet, like other governments, the Government of Pakistan supports the formal scheme on the grounds that lending to agriculture is a high risk activity because of covariate risk. Hence, such policies are often based on a market failure argument. As farm credit schemes are subsidised, policy makers must know if these schemes are worth supporting. Using a recent large household survey data from rural Pakistan (Rural Financial Market Studies or RFMS), we have attempted to estimate the effectiveness of the ADBP as a credit delivery institution. A two‐stage method that takes the endogeneity of borrowing into account is used to estimate credit impact. Results reveal that ADBP contributes to household welfare and that its impact is higher for smallholders than for large holders. Nevertheless, large holders receive the bulk of ADBP finance. The ADBP is, thus, not a cost‐effective institution in delivering rural finance. Its cost‐effectiveness can be improved by reducing its loan default cost and partially by targeting smallholders in agriculture where credit yields better results.     

Determinants of farm diversification in the Netherlands

Farm diversification has been prominently supported by agricultural policy makers aiming to support rural development. To increase the understanding of determinants influencing diversification and hence to increase the efficiency of policies aiming to support farm diversification this paper presents the results of an analysis of diversification determinants. The research investigates Dutch farms diversification strategies using Farm Structural Survey (FSS) data of 2011 including 70,392 farms. The study uses a binary logit model to determine the characteristics influencing the diversification decision in general. Furthermore, an in-depth analysis for six diversification strategies was conducted. Additionally the study categorised the specific diversification activities in order to estimate a multinomial probit model, analysing three choice categories simultaneously. This enables us to compare determinants of farm diversification in general with determinants of specific activities. The analysis includes socio- demographic, economic and geophysical farm characteristics assumed to influence the diversification decision. Even though diversification is largely influenced by similar determinants, we find differences that are most pronounced for the adoption of nature conservation strategies. Consequently, it is important for policy makers to target policies at specific diversification activities in order to increase efficiency.     

Measuring farm productivity under production uncertainty

This research introduces a novel empirical application to the assessment of farm productivity growth. While the existing research on productivity change has primarily focussed on ex post output observations, it has been shown that ignoring production uncertainty can lead to unreliable results. Using a state-contingent framework to represent the stochastic production environment, we extend the recent line of research that merged the state-contingent approach and efficiency measurement to productivity change using the Malmquist and Luenberger productivity indices. Using a balanced panel of 117 arable crop farms surveyed in 2011 and 2015, we show through the study results that productivity decreased, with technological regress being the major source of productivity change. Differences in productivity change between nonstochastic and stochastic modelling show the relevance to consider the state-contingent framework when assessing farms' productivity.     

Income risk and farm consumption behavior

Using panel data from Illinois grain farmers, a direct test of the relationship between income risk and farm consumption behavior is conducted. The estimation results indicate that income risk significantly affects farm consumption and the results are robust using alternative risk measures. This finding casts doubt on the relevance of the conventional life-cycle permanent income hypothesis, which implies that risk has no effect on consumption.     

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.     

Water access,farm productivity,and farm household income: Sri Lanka's Kirindi Oya irrigation system

Income differences attributed to differential access to water in irrigation systems are common. Prior studies of farm‐level water use in developing areas have typically been limited to using number of irrigations as a proxy for water use. We develop a volumetric measure in Sri Lanka's Kirindi Oya Irrigation System through recent farmer recall and use it in production function estimation and welfare analysis. Findings indicate substantial differences in water use by farms across seasons and across subareas of the irrigation district. Alternative plans for allocating additional water among seasons and subareas to elevate net rice revenues are examined. The recommended plan predicts higher net returns from rice and greater equality in the distribution of household income than would be generated if the additional water were allocated based on the current allocation criteria. Concurrent application of fertilizer at recommended levels would further increase net revenues and reduce income inequality.     

Determinants of off‐farm work and its effects on farm performance: the case of Norwegian grain farmers

Limited attention has been given in the literature to the impact of off‐farm work on farm performance. More knowledge about the determinants of part‐time farming and its effects on farm performance could help policymakers to introduce better targeted rural development policies. The aim in this article is to fill part of the above‐mentioned gaps by analyzing factors that influence the choices of off‐farm work by either the farmer alone or jointly by both the farmer and partner; and simultaneously examining how off‐farm work influences farm performance. These analyses were based on an unbalanced panel data set from Norwegian grain farms during 1991 to 2005. Among the determinants of off‐farm work hours, we found that, in addition to demographic, time trend, and some regional effects, there was a significant negative effect of farm output on farmers' off‐farm work hours. The production function results revealed that off‐farm work had a positive effect on farm output, at first increasing but then decreasing with increase in hours spent in off‐farm work. Furthermore, our analysis revealed no systematic effect of off‐farm work on farm technical efficiency.     

Rural non‐farm diversification,agricultural feminisation and women's autonomy in the farm: evidence from India

This study contributes to the literature on the interlinkage between household non‐farm diversification (HND), agricultural feminisation and female autonomy in farming. The study uses unit‐level data from the Indian Human Development Survey for the years 2004 ‐ 2005 and 2011 ‐ 2012. The paper employs instrumental variable regression methods to study such interlinkages. The results show HND to be a significant factor contributing to the feminisation of agriculture. The study finds some evidence that the phenomenon is distress driven. Further, greater participation of women in agriculture, as well as women's access to land rights, significantly contributes to female autonomy in farm decision‐making. The results are robust to the use of alternative indicators of agricultural feminisation.     

Farm work, off-farm work, and hired farm labour: estimating a discrete-choice model of French farm couples' labour decisions

We model jointly several types of discrete-choice labour decisionsof farm couples: farm work, off-farm work and hired farm labour.Rather than estimating a set of reduced-form participation equationsthat is subject to an internal inconsistency problem, we estimatea 16-choice multinomial model. We find that farm labour of operatorsand of spouses are substitutes. Hired farm labour increaseswith the farmer's qualifications, perhaps substituting for thecouple's labour inputs. Other adults in the household substitutefor the farm labour input of the farm couple and hired workers.We find that the organisation of work by French farm householdshas changed over time, in the direction of a more equal sharingof tasks and responsibilities between members of the farm family.