Abstract
The heterogeneity in income variability across Slovenian farms and time is explained by subsidies received by farm, off-farm income received by farm, and farm characteristics. Unbalanced and balanced farm-level panel data from the Slovenian farm accountancy data network are used to estimate coefficients of variation for gross farm revenues in less favoured areas (LFAs) and non-LFAs over the period 2004 to 2013. Gross farm income slightly increased over time with cyclical oscillations and an increase in the role of subsidies. Our estimations suggest that subsidies and off-farm income for non-LFA farms and farm specialisation for both LFA and non-LFA farms reduce farm income risk, whilst subsidies and farm size for LFA farms, and financial immobility for both LFA and non-LFA farms increase farm income risk. There is a non-linear relationship between farm size and income risk for LFA farms.
Highlights
The paper deals with agricultural sustainability at the farm level, thereby helping address questions about how to measure and understand the drivers of farm income risk, including which determinants make farm income more or less risky, and are more sustainable in the long-term (Enjolras et al, 2014)
We first present the descriptive statistics for gross farm income and means of variables, and econometric results for drivers of farm income risk for the Slovenian farm accountancy data network (FADN) unbalanced and balanced samples
It provides new empirical evidence to substantiate empirical and policy statements and lessons learned about farm income risk behaviour, which is important for agricultural and rural sustainability at the farm level concerning the interaction between agriculture and the rural economy
Summary
Latruffe et al (2016) provide a comprehensive review of the indicators used in the literature to measure agricultural sustainability using a typology based on three sustainability components: environmental, economic and social. The existence of risk is an important factor that is used to justify numerous governmental interventions in agriculture. Most farms and agricultural land remained under private ownership and operation. In comparison with some other ex-communist countries, the transition to a market economy did not induce radical changes in the persistent family-farm background of Slovenian agriculture. In 2016, the average operational farm size in Slovenia was 6.8 hectares of (utilized) agricultural area. Farms have on average 5.6 hectares of forest (SORS, 2016)
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