The farm succession effect on farmers’ management choices

Abstract

It is acknowledged that the identification of a successor within the family farm can affect the farm development, which is conventionally referred to as the succession effect. This dynamic is of particular relevance in Europe, where fostering generational renewal towards increased farm modernization and innovation is on top of policy agenda. Yet, the succession effect on the farmers’ decision-making has been poorly substantiated with empirical and quantitative evidence, whereas the current policy framework mostly disregards this phenomenon. This paper aims to verify whether and to what extent the identification of a successor within the family farm affects the farmer’s strategic choices, and to identify which management strategies are privileged by farmers having identified a successor. Based on a cross-sectional dataset of 768 farms from across nine European countries, a control function model is employed to test the succession effect on the farmer’s decision-making, while parametric tests, odds analysis and multivariate probit regressions are applied to identify main strategies. The results confirm that the identification of a successor has a significant impact on farmers’ choices, leading to an average increase of about two additional strategies adopted, and that strategies like agricultural and non-agricultural diversification, cooperation and technology adoption are privileged by farmers having a successor. The paper discusses how the current policies could be improved to better leverage the succession effect, and identifies possible strategies.