Abstract
This paper investigates structural change in family farming in ten EU New Member States from Central and Eastern Europe which can be treated as a borderline between transition and developed economies. The paper proposes that farms using at least one Annual Work Unit (AWU) family labour are classified as family since it is considered that engaging less than one full-time family member may not show commitment to the family operation. The Oaxaca-Blinder decomposition is employed to analyse the drivers of structural change at a farm level, i.e., the extent to which it is technology or endowment driven. To compare the developments in different countries, the changes are presented in relative terms in order to reveal the relative distance travelled by the structural change in individual New Member States alongside the relative importance of technology and endowments changes. The estimation of a translog production function by country is used to derive the corresponding decompositions. Empirical analysis is based on data from the EU Farm Accountancy Data Network (FADN) for two time points—2007, when the last of the ten CEECs joined the EU—Bulgaria and Romania, and 2015 to investigate structural change during the first decade of EU membership. The results show that the differences in the initial conditions and the adjustments to the CAP have brought about quite a diverse picture concerning the changes in output in the family and non-family farms in the NMS. The a priori expected dynamics of positive output growth in family farms and negative in the non-family has only materialised in Latvia, Romania and Slovakia. The decomposition of output changes suggests a positive effect of technical change in family farms only in the early years of EU accession. Concerning endowments, their effect on structural change is mostly positive with the only exception of Slovenia. This suggests that the family farming sector grows by accumulating productive resources. However, this growth has not always materialised in increase of family farms output.
Highlights
This paper investigates structural change in family farming in ten European Union (EU) New Member States (NMS), which can be treated as a borderline between transition and developed economies, i.e., Bulgaria, Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia
We focus on family farms since structural change is central for family farming as it is a factor that helps offset certain disadvantages of family farms in respect to economic efficiency, access to farming resources, such as land and capital, and access to markets, in terms of bargaining power in the food chain
This paper studied the sources of agricultural output changes in family farms in the Central and East European countries (CEECs)
Summary
This paper investigates structural change in family farming in ten EU New Member States (NMS), which can be treated as a borderline between transition and developed economies, i.e., Bulgaria, Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia. Changes in the mix of land, labour, and capital used in farm production, in parallel with the application of new technologies and equipment, usually lead to an increase of competitiveness and efficiency of the agricultural sector From this point of view, structural change is a positive and politically desired development. We focus on family farms since structural change is central for family farming as it is a factor that helps offset certain disadvantages of family farms in respect to economic efficiency, access to farming resources, such as land and capital, and access to markets, in terms of bargaining power in the food chain Since they co-exist with non-family types of organisation of agricultural production, family farms need to compete in terms of efficiency (scale, productivity) and in terms of innovation and entrepreneurship, and, from this point of view, the uptake of new technologies and the weight of technology in structural change is a central issue [3]. The estimation of a translog production function by country for all family farms in the FADN database, as defined in the paper, is used to derive the corresponding decompositions
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