The objective of this study is to identify factors determining the economic performance of agricultural holdings in Italy, with specific attention to the impact of the adoption of on-farm diversification strategies, namely income diversification and product differentiation. The adoption of these kinds of strategies has been increasingly recogni...sed as a viable business option in agriculture as they allow better allocation of farm resources and an increase in the quota of value added retained on farms and therefore not passed on to other agents operating at the end of the food supply chain. By using a panel of professional Italian farms over the time period of 2003-2009, we estimate random effect, ordinary least square and quantile regression models to estimate the impact of income diversification and product differentiation strategies on the levels of farm income per unit of labour income. Our findings show that scale economies are important positive determinants of farm economic performance. On the contrary, when the family play an important role in the farm business, economic performance is worse. Finally, we do not find evidence of a statistically significant impact of the adoption of income diversification and product differentiation strategies. This latter result may be interpreted as a signal that farms use these strategies as risk management tools rather than as income increasing ones.
The Less Favoured Areas (LFAs) Directive (75/268) which was introduced in 1975, was the first common European instrument of regional agricultural structural policy. LFAs are areas where agriculture is hampered by permanent natural handicaps. The major objectives were to ensure the continuation of farming, thereby maintaining a minimum populatio...n level and preserving scenic landscapes and environmentally valuable habitats. In the Netherlands, the LFA measure is used as an additional payment, to compensate farmers for negative economic effects due to the conservation of these natural handicaps. It was not implemented as a stand alone policy, but is linked to measures aiming at active nature and landscape conservation management. In this paper, the effects will be examined of the regulations aiming at the conservation of natural handicaps on farm businesses within LFAs, when comparing them to farm businesses outside LFAs, where these regulations and handicaps do not exist. The main data source that was used is the Farm Accountancy Data Network. Reference groups of farms were compiled with the use of the simple and multiple imputation approach in Stars (Statistics for Regional Studies). Both analyses were tested with the use of a parametric and a nonparametric test. When comparing the results of both analyses, it can be concluded that there is no evidence that there is a statistical difference in family farm income corrected for and not corrected for LFA payment between the LFA farm businesses and the reference groups. Based on these findings it can be concluded that the size of the compensatory allowances is small and there is no evidence that it has a significant effect on the family farm income of LFA farm businesses. The main purpose of the Dutch LFA policy is to compensate farm businesses for negative economic effects due to the conservation of natural handicaps. Although this may be true for some individual farms, based on the methods used in this paper, it appears not to be the case for the collectivity of LFA premium beneficiaries as a whole.
Agricultural produce certification is synonymous to farm assurance of which cocoa certification is an example; dealing with issues of Good Agricultural, Environmental and Social Practices (GAP, GEP and GSP) in cocoa production. Essentially, GAP, GEP and GSP packages had in-built mechanism that can aid farmers mitigate factors that could lead to... farm income risks in cocoa production. Consequently, this study examined the influence of cocoa certification on income risks of cocoa farming households in South-west Nigeria. A multistage sampling technique was used to select 180 cocoa farming households from whose heads data were obtained with interview schedule in Southwest Nigeria. Data were analyzed with Chi-square Statistic, Income Risk Management Diversification Index (IRD) and Mann-Whitney-U Test Statistic. Chi-square analysis shows that (52.3%) certified cocoa farming households employed more risk management strategies than (94.2%) uncertified cocoa farming households (p<0.01). The Mann-Whitney-U test revealed a significant difference (p>0.05) between the income risk management practices of certified and uncertified cocoa farming households. Therefore, produce certification has been helping cocoa farming households in mitigating farm income risk in cocoa production through the employment of diverse (risk) management strategies. Hence, stakeholders should intensify efforts in encouraging farming households to embrace (cocoa) produce certification.
The objective of the paper is to provide an overview of the situation and performance of Croatian farms. Croatian farmers rarely keep business books and therefore farm level business data are deficient. Croatian accession to the European Union in 2013 brought numerous innovations to agricultural sector. One is introduction of Farm Accountancy D...ata Network (FADN) which aims to determine the impact of the Common Agricultural Policy on national agriculture of EU member states. The sample of Croatian FADN comprises 1,250 commercial farms. The paper brings results of agricultural sector financial analysis for the period 2011-2013. Total farm output decreased, but since the stronger decrease trend occurred in total inputs, this led to positive trend of gross and net farm income in the year 2013. Positive results are also shown at efficiency and productivity of Croatian farms. In the years 2011 and 2012 farms operated below the efficiency level while in 2013 efficiency increased above the efficiency level. In the observed period there was a 70% increase in productivity. The analysis shows that the most efficient farms are those in vegetables and flowers type. It also has the highest debt ratio due to their capital intensiveness. The vegetable and floriculture farms have the largest gross farm income in all three analysed years, but with a large drop in 2013, while the farms in type pigs and poultry have largest increase of gross farm income in last observed year.
Increased risk due to global warming has already become embedded in agricultural decision making in Central Asia and uncertainties are projected to increase even further. Agro-ecology and economies of Central Asia are heterogeneous and very little is known about the impact of climate change at the subnational levels. The bio-economic farm model... is used for ex-ante assessment of climate change impacts at sub-national levels in Central Asia. The bio-economic farm model is calibrated to ten farming systems in Central Asia based on the household survey and crop growth experiment data. The production uncertainties and the adaptation options of agricultural producers to changing environments are considered paramount in the simulations. Very large differences in climate change impacts across the studied farming systems are found. The positive income gains in large-scale commercial farms in the northern regions of Kazakhstan and negative impact in small-scale farms in arid zones of Tajikistan are likely to happen. Producers in Kyrgyzstan may expect higher revenues but also higher income volatilities in the future. Agricultural producers in Uzbekistan may benefit in the near future but may lose their income in the distant future. The negative impacts could be further aggravated in arid zones of Central Asia if irrigation water availability decline due to climate change and water demand increase in upstream regions. The scenario simulations show that market liberalization and improved commodity exchange between the countries have very good potential to cope with the negative consequences of climate change.
JEL classification: Q11, Q18
The main objective of the paper is the analysis of changes on the level of income of agricultural producers, which took place in Poland in the early years of the accession to the EU, as well as a determination of the scale of the impact of financial support under the Common Agricultural Policy on the farm income situation. Poland’s membership... in the EU gives rural farms opportunities to improve their economic situation. Financial aid, mainly in the form of a direct payment, has been the main factor determining the economical status of rural farms, whilst the other income making factors, such as improved productivity and increased agricultural production have played a much smaller role. The increase in revenue has enabled farmers not only to increase current expenditures, but also to carry out modernization efforts, which will determine the future economic and structural situation of the Polish agricultural sector and its competitiveness. However, a strong differentiation in terms of the economic situation of rural farms according to their size and specialization in production was also noticed. As a result, there is a still large number of farms in which the revenues received by farmers are insufficient to assure them adequate life standard. Therefore such farms are not able to both develop and invest. Only economically strong rural farms with high production potential have such opportunities, meaning that EU support will never be able to fully minimize the effects of small-scale production or to offset the insufficient efficiency and productivity of production factors.
The Nigerian’s agricultural sub-sector contributes about 37 percent of her Gross Domestic Product (GDP) and employs about 65 per cent of the adult labour force. It is thus the major source of food and fibre for the nation. However, there are increasing concerns about the quality and level of safety of many of the agricultural export commoditi...es, particularly in the European markets due to the composition of high level of unauthorized pesticides. This is a major challenge to the level of market competitiveness for these commodities in the international markets. This study therefore examined the effect of quality assurance deficit on market competitiveness and household income levels. Trends in Nigeria’s agricultural export trade between 1980 and 2014 were examined and emphasis was placed on cowpea, dried maize, melon seeds and palm oil. Descriptive and qualitative statistical methods were used to analyze the data. Quantitative statistics included the use of econometric models. Results indicated that there was an increase in the general price level of the commodities at the international market over time. The aggregate market demand for each of them dropped sharply in the last one decade even when the market price per unit increased steadily. This negatively affected the households’ average income level as returns on sales of export commodities declined. Huge quantities of the commodities were then forced to be sold at the local markets at cheaper prices. This development negatively affects the consumptions patterns of the exporters as they now have reduced disposable income. Appropriate agencies of government need to be awake to their responsibilities of assessing and certifying the quality of the Nigerian agricultural commodities before exporting them abroad. This will help to further boost the level of consumer confidence in these export commodities especially at the international markets.
JEL Classification: Q13
To examine and compare the technical efficiency of dairy sector and the beef sector, this research introduced the main indicators of milk and beef production in the world, EU and Hungarian aggregates. Based on the data it can be said that the milk and beef production of Hungary does not occupy any significant position in the world as well as in... the European Union neither today nor even in the past. If Hungry must compete in the European counties and international market, their dairy sector must focus to increase of their production efficiency as the key breakthrough point. This paper we compared technical efficiency of both dairy and beef sectors in total, for the year 2014 and 2015 separately and based on the farm size. The specific objectives of the research are: comparing dairy and beef farms efficiency in Hungary. Based on the results, we can determine which sector in Hungary is more effective. The second objective is to compare the efficiencies of both the sectors in 2014 and 2015 separately and from the results we can determine which year was more effective in terms of production efficiency and the third objective of the research is technical efficiency comparison of certain economic sizes for both sectors. In the research, we used (KOVACS, 2009) deterministic (DEA) model adapted to the Hungarian dairy farms and beef farms. For the dairy farms milk and dairy products as well as meat (other income). The input factors originated from the domestic AKI - FADN database. Summarizing the results of the research it can be conclude that the dairy sector is more effective than the beef sector in Hungary. In terms of years compared 2014 was more effective for both sector as compared with 2015. In regards to the farm size almost the same result in evaluating the scale of efficiency, which means that large economies can in most cases, manage resources more efficiently than small farms. In the examined years, based on the results of the DEA model, the VRS technical efficiency of the test for these two years was 72.90% for the dairy farms and 63.60% for the beef farms, which means that the dairy sector is more efficient than the beef sector in Hungary. The VRS technical efficiency of the research was 82.10% in 2014 and 75.10% in 2015 for the dairy farms and 77.50% in 2014 and 68.90% in 2015 for the beef farms, which means that both the dairy sector and the beef sectors followed the same trend and were more efficient in 2014 compared to the efficiency in 2015. The large size dairy farms were most effective in Hungary in the examined period (90.90%). VRS technical efficiency for small farms is 88% and the total number of small, the technical efficiency medium farms was 72.80% For the beef sector VRS technical efficiency for small farms is 71.30% and the technical efficiency medium farms was 74.40% and 70% of the beef meat producing farms in Hungary are medium sized. So, the conclusion is the small size dairy farms have a higher VRS efficiency than the small size beef farms whereas medium sized beef farms had higher VRS efficiency than the medium size dairy farms. As a conclusion, both dairy and beef sectors in Hungary have the potential to overcome technology and knowledge constraints and attain the upmost attainable productivity level through improvements in; farmer volume of production i.e. output, beef cattle technologies, and advertising, and the efficiency of the technology transfer process.
JEL Code: Q13
Multifuncionality has become a central concern at both conceptual and empirical levels. In this study, a comparative evaluation of the economic performance of conventional and multifunctional farms (mainly organic farms) was conducted for the Lake Kerkini region (North Greece) with the use of mixed integer non-linear programming method. The eco...nomic performance of farms was evaluated in terms of farm income, resource allocation, production level and production mix. The results indicate that multifunctional farms have overall better economic performance and young farm managers are keener to adopt multifunctional farming than the older ones. Differences between the model results and the observed facts are attributed to the structural characteristics of the farms, along with the CAP measures and the existence of multiple objectives, beyond maximization of net farm returns.
This paper analyses the impact on investments of contractual arrangements between farms and agribusiness in the Armenian dairy sector. Our empirical evidence is based on a unique survey of 300 Armenian dairy farms. The dairy sector is of particular importance as it provides vital employment and income, in an environment of weak social security...and scarce job opportunities. Furthermore, milk production is predominantly organized in small-scale farms, which are most likely to be affected by adversarial financial conditions and limited in their opportunities to raise resources to invest. The results show that a large share of milk producers in Armenia is actively investing to upgrade their farm business. Furthermore, investment activity is not limited to large dairy farmers as over 30% of respondents with less than eight cows have made dairy-specific investments. We find that the linkages between farms and agribusiness – and more specifically the support programs that agribusiness firms offer to their suppliers – have been crucial in stimulating this restructuring process at the farm level. Interestingly, farmers with a more exclusive relationship to the buyer and farmers that deliver to more internationally oriented buyers are more likely to receive support. On the other hand, buyers that operate in a more competitive market are less likely to provide support to their suppliers. These findings have interesting policy implications. On the one hand, our results point to the gains that can be made from openness to international firms. On the other hand, the negative competition effect indicates that buyers are unable to enforce repayment of the provided farm services in an environment where a lot of buyers are competing for the same supply. Policy makers should look at ways of improving the enforcement capability of dairy companies under these circumstances.
This paper presents an assessment of the impacts of introducing the greening scenario of the CAP, proposed by the European Commission as an alternative for the reformed CAP after 2013. In the past, the CAP has undergone numerous transformations in response to the changing macroeconomic environment and in reaction to developments in the farming...sectors in EU countries. On the 12th of October 2011, the Commission presented a set of legal proposals designed to make the CAP a more effective policy to encourage more competitive and sustainable agriculture and vibrant rural areas. The proposal brings various new elements under consideration, some of them raising strong controversies such as introducing “greening” as a component of direct payments. Changes in the direct payments scheme in line with the EC proposition include forcing adjustments in the cropping pattern and creating ecological focus areas (EFA) on 7% of the farm land ; the consequences of such a proposal on the size and structure of agricultural production, and thus on the economic performance of farms and the whole agricultural sector are uncertain. The authors analyse historical changes to the CAP with a focus on a growing importance of the environmental component of the CAP, discuss different scenarios of shaping the direct payments system and present the results of modelling the impacts of greening the CAP on the Polish farming sector with the use of the LP optimisation model. The study was based on Polish FADN data. Results show that the majority of farmers in Poland comply with the crop diversification constraint of greening. However, establishing the required EFAs and necessary diversification on farms with simplified cropping structures will have a negative impact on the volume of agricultural production as well as on farm incomes.
There has been a growing openness and importance in trade over time as indicated by an increasing ratio of trade to gross domestic product for the World. However, some recent movements have been more protectionist and less open to trade. The potential impacts of less trade are explored with the United States (US) taken as an example. Trade agre...ements have been important in increasing trade by the US, particularly for US agriculture which has had a trade surplus since 1959. Countries should benefit from trade according to economic theory. However, stances taken by the US administration during the first half of 2017 have resulted in the withdrawal of the US from the Trans-Partnership Agreement and an announced renegotiation of the North American Free Trade Agreement. With falling US farm income, the potential undoing of trade agreement benefits, and possible trade retaliations, US agriculture is concerned about any potential disruption in exports and losses from less trade. In addition, US consumers and importers of US agriculture should be concerned about a potential decrease in trade.
JEL Code: Q18
Although the dairy market crisis eased in 2011, Hungarian dairy farmers still find it difficult to produce milk profitably. As a result of the crisis, many dairy farmers abandoned milk production or reduced the size of their dairy herds in 2009 and 2010. Today, many of farmers are also considering ceasing production, in spite of the fact that t...he global dairy industry is facing an upturn. A dairy farm can operate profitablyy in three ways: 1) if it can reach a relatively high level of producer price 2) if it can increase milk production per cow 3) if it can achieve a relatively low cost of production. In the present study, I primarily analyse the development of the Hungarian producer price of raw milk in international comparison. Next, I list those factors which directly or indirectly influence the producer price of raw milk. Finally, I examine the relationship among disposable income, milk consumption and milk price. Since the start of 2009, the dairy market has been confronted with a period of extraordinary law prices. After bottoming out, prices had begun to slowly stabilise during the second half of 2009. By the end of that summer, international prices had started to strengthen and the last quarter of 2009 was characterized by a steady rise in prices. The strong recovery in prices experienced after 2009 was triggered by increased demand, mainly from oil exporting countries, but also from China.
The price increase, however, reflected a significant increase in input costs in Hungary; the high level of feed prices and the unfavourable change in the macroeconomic environment must be stressed. The rising excise duty on diesel fuel and the VAT increase had a direct impact on Hungarian dairy farmers. These negative factors have increased the costs of the sector, narrowing the ability of those active in it to operate efficiently.
Agricultural production is among the riskiest production activities. Similarly to other branches of agriculture in animal breeding the finished product is the result of complex procedures. The biological technological procedure, the creation of the product is affected by an outstanding number of environmental factors which also cause uncertaint...ies. In the North Great Plain Region of Hungary, sows, gilts and slaughter pigs are produced on a corporate farm. The reliable operation data of this company provide a stable basis for and estimating future costs and revenue and their distributions. Monte Carlo methods are one of the generally accepted tools for modeling risks. The significant independent variables, their ranges and probability distributions, and the correlation between them were inputs to the model. The values of the variables were produced using a random number generator. The computer simulation was performed using @Ris (PalisadeCorporation) software. The study concentrates on the factors affecting the number of off spring (piglets). Model inputs were the mating, mortality and farrowing rates; the costs and the income values based on these rates have been analysed as the output data of the model.
The study aimed at investigating the effects of off-farm participation on technical efficiency of maize production in the Tolon district of the Northern Region, Ghana. The Logit regression model was used to analyze the determinants of off-farm participation while the stochastic frontier production function was used to model the determinants of...maize output and technical efficiency. The empirical results from the logistic regression model indicate that age of farmer, educational attainment, farming experience, farm size, and previous farm income are significant drivers of farmers’ participation in off-farm activities. Farmers’ average technical efficiency level was 90.7% suggesting a 9.3% potential loss to inefficiency. Moreover, participation in off-farm activities had a negative influence on farmers’ technical efficiency level. The study, therefore, recommends that farm-level policy should be directed towards making the agricultural sector attractive by promoting investment and agricultural employment opportunities in the rural areas so as to ensure full commitment to farming activities.
JEL code: Q22
Agricultural economics and its part, rural economics plays a determining role in Hungary. Most rural families perform self-sufficient farm production for a living. In the present conditions of infrastructure and human resources, there are regions where the only rural alternative for employment is agriculture. There are significant differences a...mong the regions considering natural resources and equipment available for farm production, and these differences affect potential income (Vöröset al. 1999). The primary aim of the European Union is to reduce such differences among the regions.The new research program of the University of Debrecen tackles the fundamental questions of regional development through the research and management of social asymmetries by using economic and other relevant tools. This program also provides suggestions for facilitating the development of less-favoured areas.
Through the connection to rural resources agriculture has an impact on the three functions of countryside: ecology, society and economy. Resources of economy and production environment are continuously changing thus farmers have to adapt to these changing circumstances. One of the adaptation methods is the diversification of activities to promo...te effective capacity utilization and additional profit. However there is no standard definition of diversification from the point of agricultural economics aspect both traditional approaches and the influence of European Union should also be considered to define it. Diversification and alternative income opportunities could be subsistence possibilities for several farmers. This could be defined not only at private holdings’ but at enterprises’ level. According to a traditional approach Hungarian statistical databases collect on-farm and off-farm agricultural activities depending on the connection to resources of a farm business. Analysing this database an overall picture could be defined considering the position and characteristic of diversified farmers and the popularity of each activity among agricultural producers. Based on a study, published in 2011 (Hamza, 2011) this paper also involves the latest statistical data (2010, 2013). Analysing dataset of period 2000-2013 this paper gives an overall overview about national and regional position and characteristics of diversified holdings and activities.
JEL code: Q19
Many farmers, in addition to normal farming activity, have already turned to agritourism as a source of additional farm income and opportunities. There are numerous benefits from the development of agritourism: it may strengthen local economy, create job opportunities and new businesses; develop and promote training and certification programs t...o introduce young people to agriculture and environment. Agritourism helps preserve rural lifestyles and landscape and also offers the opportunity to provide "sustainable" or "green" tourism. Organic agriculture is a cultural evolution that finds its origins in a environmentalist culture. Furthermore the focus on these products is due to demand on healthy foods with high quality standard limiting chemical substances usage. It’s clear the link of the organic agriculture with agritourism and tourism services. They have a considerable role in the future development of rural areas. The purpose of this paper was to identify and examine those factors that have helped rural communities successfully develop agritourism, in particular organic agritourism and its entrepreneurship opportunities. Several focus groups were conducted with local business persons and leaders about a applicative case of South Italy area.