Structural factors of labour allocation for farm diversification activities

Abstract

While the share of agriculture, forestry, and fisheries in rural economies has declined, the importance of diversification activities has increased. The aim of this study is to investigate how structural factors affect both the decision of diversification into on-farm non-agricultural activities and the total labour assigned to them, measured in terms of the workdays allocated to producing diversification activities. Using Tuscany, a region in central Italy, as a case study, a negative binomial hurdle model has been applied to represent the two steps involved in farmers’ behaviour. Farmers first decide whether to diversify and then decide the amount of farm resources to devote to diversification. The results have revealed that farms located in regions more distant from urban areas are more likely to diversify, but that distance is not an influential factor in predicting the number of workdays dedicated to diversification. In addition, small family farms are less likely to diversify than large farms, and those that do so dedicate fewer workdays to diversification activities. A possible explanation for this evidence is that structural and endowment constraints are entrance barriers for involvement in on-farm non-agricultural production.