Can succession improve the economic situation of family farms in the short term? Evidence from Poland based on panel data

Abstract

There is a widespread belief that the initial period of running an economic entity can be critical, due to the limited experience of a new entrepreneur and as a result of the shortage of resources for the development of a family business. Until now, there have been no studies of changes in farms in the short term resulting from intergenerational succession, i.e. transfers of farms. This paper fills that gap. Using the methods of counterfactual modelling and the panel data representative for Polish commercial farms, the study attempts to answer the question of whether and to what extent the positive, negative or neutral economic effects of the intergenerational transfer have been observed in the farms surveyed. The analyses showed that, on average, family succession did not translate into a reduction of production potential of the farms analysed and did not cause a deterioration in their economic performance. The results of counterfactual modelling showed that the improved economic situation of farms with succession had not directly resulted from successions, since the similar processes were noted in the control units. The findings have important implications for the EU CAP, especially for the instruments aimed at generational renewal of agriculture.