The impact of socio-economic factors and incentives on farmers’ investment behaviour

Abstract

Abstract This article investigates how socio-economic factors and incentives affect farmers’ investment behaviour. The motivation is a need for a better quantitative knowledge of investment behaviour in order to support farmers’ investment decisions through extension services and public investment support schemes. Data from a questionnaire survey among 208 Danish pig producers are analysed by use of logistic regression and the relationships between socio-economic factors, investment incentives and farmers’ investment behaviour are empirically revealed. The results show that the farmers who rank economic incentives as the most important when making investments are those who yield the best financial results. Off-farm income and partial productivity were also higher on these farms. As hypothesised, young farmers with a large production are more likely to invest in real assets than others. No cross sectional trends relating the incentives for making investments to the investment propensity were identified. On...