The ‘pure’ and structural contributions to the average farm size growth in the EU: The index decomposition approach

Abstract

Abstract The average farm size is an important indicator of agricultural sustainability. Over the last decades, farmers in the European Union (EU) Member States faced multiple changes of business environment that fuelled shifts in agricultural land use and farm structure. The aim of this paper is to develop and employ a novel index decomposition analysis framework that allows decomposing the changes in the average farm size into pure farm size change and structural effects (specialization and spatial distribution). The empirical research covers the period of 2005–2016 and considers the three levels of aggregation: the EU, Member States, and farming types. Results indicate a remarkable growth in the average farm size at the EU level over 2005–2016. Chain-linked analysis shows that the steepest increase in the average farm size is observed following switch from coupled to decoupled direct payments. Findings suggest that the most serious increase in the average farm size was observed for field crop and specialist grazing livestock farms. Although the main effect contributing to the change in the average farm size at the EU level was the pure increase in the average farm size, results confirm that structural effects also played an important role. However, the contribution of structural effects varies across types of farming and the Member States.