Determining Factors of Farm Exit in Agriculture in Switzerland

Abstract

(ProQuest: ... denotes formula omitted.)IntroductionSwitzerland has seen significant structural change in the agricultural sector over the past few decades. Between 1980 and 2013 the number of farms in Switzerland fell by almost 50%, i.e. by an average of 1.9% per annum (FSO, 2014). A temporary rise of the exit rates between 1995 and 2000 may be due to the agricultural policy reform which started in 1993 with the reduction of market support and the introduction of general direct payments. Despite this, the more favourable agricultural-policy framework conditions in Switzerland have served to lessen the blow somewhat compared to neighbouring countries (Eurostat, 2012). The average cultivated area per farm is constantly increasing, with no levelling off of this trend being noted to date. With 19 ha per farm in 2013, the average size is less than half of the size in Germany and France, but larger than in Italy. Compared to Austria, where the natural conditions are similar, the average size is slightly lower in Switzerland. Whereas structural change was similar in all regions of Switzerland, it was lower in the mountain regions than in the valley regions of Austria, due to specific policy measures in favour of the mountain areas and pressure from urban centers (Streifeneder, 2009). The structural change has changed the shares of farm sizes: Whereas the number of farms of up to 10 ha in size has fallen by 70%, the number of farms over 50 ha in size has almost quadrupled. Concentration processes of different intensities were to be found among the various production activities, with a particularly sharp drop in the number of farms with pig and poultry production and with vegetable and potato farming. By contrast, the number of individual farm types such as suckler-cow farms has actually increased. The family farm continues to be the predominant form of enterprise, sometimes accompanied by a secondary source of income. The number of those employed in agriculture fell to approximately the same extent as the number of farms. Hence, the average farm cultivates an ever-increasing area with the same-sized workforce.Structural change in agriculture covers several characteristics such as land use, ownership, and distribution of farm size. This paper focuses on the farms exiting from the agricultural sector and the factors influencing this exit. To analyse exit probability, the logistic regression method is used by using the Farm Structure Survey (FSS). FSS covers almost all Swiss farms but contains no economic data.This paper is organised as follows. The first section provides an overview of the determining factors for farm exit identified in the literature. The second section outlines the methods and the underlying data used. The last two sections contain the results of the analysis and some concluding remarks.Overview of the literatureDecisive factors for structural change have already been the subject of numerous investigations (Baur, 1999; Hofer, 2002; Mann, 2003; Bragg and Dalton, 2004; Foltz, 2004; Snell, 2005; Hoppe and Korb, 2006; Juvancic, 2006; Key and Roberts, 2006; Weiss, 2006; Kirner and Gazzarin, 2007; Rossier, 2007; Meier et al., 2009; Pushkarskaya and Vedenov, 2009; Petrick and Zier, 2011). According to this literature, factors affecting structural change can be grouped under human capital, farm structure, structural environment and socio-economic categories (Table 1).First, the important characteristics of human capital themselves are their age, education, the number of children the farmer has, Presence of family successor and the genre of the farmer. In all of the investigations, the age of the farm manager proves to be a highly significant factor in farm exit (Baur, 1999; Hofer, 2002; Bragg and Dalton, 2004; Juvancic, 2006; Weiss, 2006; Meier et al., 2009). Not surprisingly, older farmers have higher exit rates (Gale, 2003). Thus, the causes suggested for farm exit are loss of physical ability to work, the farmers' awareness of limitations in his ability to operate the farm, and unexpected incidents (Kimhi and Bollman, 1999). …