The Role of the Start-Up Aid for Young Farmers in the Adoption of Innovative Agricultural Activities: The Case of Aloe Vera

Angelos Liontakis,Alexandra Sintori,Irene Tzouramani

doi:10.3390/agriculture11040349

Abstract

The poor generational renewal has been identified as a key issue for the EU policy that undermines the restructuring of the agricultural sector and the revitalisation of rural areas. The start-up aid for young farmers is one of the main EU-driven policy measures that try to mitigate this trend, by facilitating the initial investment of young newcomers in agriculture. At the same time, innovative crops with appealing characteristics are proposed as promising alternatives with high socioeconomic and low environmental impacts. Recently, a draft new call of the start-up aid for young farmers measure has been set under public consultation in Greece, which significantly alters the requirements and the level of support of the beneficiaries, compared to the previous one. The aim of this study is to explore the consequences of this change to the desirability to invest in the organic aloe vera crop, one of the leading innovating crops in Greece. In this study, taking into consideration the embedded risk and uncertainty, we utilise a stochastic version of the Net Present Value (NPV) analysis, a common discount cash flows method to detect the desirability of an investment. Results indicate that the potential alteration of the start-up aid for young farmers deteriorates the desirability of this investment and thus prevents farmers from its adoption. The analysis provides useful insights by highlighting risk factors and the possible impacts of policy measures on the desirability of innovative crops; thus, it can be useful both for investors and policymakers.

Highlights

In recent years, an increasing trend towards the establishment of new innovative crops appeared in Greece
This analysis examines the role of policy measures in the adoption of innovative crops
The study uses the cultivation of aloe vera in Greece as an example to demonstrate the effect of the new farmers’ policy measure and the start-up aid it provides to the desirability of the investment on alternative and less common but propitious crops

Summary

Introduction

An increasing trend towards the establishment of new innovative crops appeared in Greece. From the beginning of the financial crisis in Greece, many young people thought of or even attempted to return to their roots and take up farming as a way out of unemployment [3] Among these highly educated young people, alternative crops appeared to be very popular. The socalled “young farmer problem” is identified as an urgent issue in the EU that jeopardizes the evolution of the sector and its competitiveness in the decades This kind of support targets the restructuring of the agricultural sector and the revitalisation of the rural population by providing incentives to facilitate initial investments for the establishment of the farm [4]

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