Structural Changes in Israeli Family Farms: Long-Run Trends in the Farm Size Distribution and the Role of Part-Time Farming

Ayal Kimhi,Nitzan Tzur-Ilan

doi:10.3390/agriculture11060518

Abstract

Israeli agriculture has experienced rapid structural changes in recent decades, including the massive exit of farmers, a resulting increase in average farm size, a higher farm specialization and a higher reliance on non-farm income sources. The higher farm heterogeneity makes it necessary to examine changes in the entire farm size distribution rather than the common practice of analyzing changes in the average farm size alone. This article proposes a nonparametric analysis in which the change in the distribution of farm sizes between two periods is decomposed into several components, and the contributions of subgroups of farms to this change are analyzed. Using data on Israeli family farms, we analyze the changes in the farm size distribution in two separate time periods that are characterized by very different economic environments, focusing on the different contributions of full-time farms and part-time farms to the overall distributional changes. We found that between 1971 and 1981, a period characterized by stability and prosperity, the farm size distribution has shifted to the right with relatively minor changes in higher moments of the distribution. On the other hand, between 1981 and 1995, a largely unfavorable period to Israeli farmers, the change in the distribution was much more complex. While the overall change in the size distribution of farms was smaller in magnitude than in the earlier period, higher moments of the distribution were not less important than the increase in the mean and led to higher dispersion of farm sizes. Between 1971 and 1981, the contributions of full- and part-time farms to the change in the size distribution were quite similar. Between 1981 and 1995, however, full-time farms contributed mostly to the growth in the average farm size, while the average farm size among part-time farms actually decreased, and their contribution to the higher dispersion of farm sizes was quantitatively larger. This highlights the need to analyze the changes in the entire farm size distribution rather than focusing on the mean alone, and to allow for differences between types of farms.

Highlights

Agricultural sectors in most countries have experienced considerable structural changes over the years
We report the results of apoplying the decomposition methodology described above to the case of changes in the farm size distribution in Israel
The total change is a simple vertical subtraction of the initial-period density function from the end-period density function. For both sub-periods, the top panel indicates that the farm size distribution has shifted to the right: relatively small farm sizes show mostly negative values, while relatively large farm sizes show mostly positive values

Summary

Introduction

Agricultural sectors in most countries have experienced considerable structural changes over the years. A well-known stylized fact in agricultural economics is that the number of farms in developed economies declines over time while the size of the average farm increases These trends have been documented and analyzed for the U.S (e.g., [1,2,3,4,5]), Canada [6], Britain [7], Italy [8], Germany [9], Austria [10], The Netherlands [11], Sweden [12], Hungary [13,14], Slovenia [15], and Israel [16,17], among other countries. This structural change process has been attributed to a multiplicity of factors ranging from innovation and technological progress to policy reforms, trade liberalization and resource mobility [18,19]

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Conclusion