What drives family farm size growth in Hungary?

Abstract

During the last two decades, the number of Hungarian family farms has declined, while average farm size has grown. To identify the drivers of farm size growth, the paper investigates the importance of human capital along with leadership skills, farm and spatial farm regional location characteristics, and government subsidies for Hungarian family farms using a Farm Accountancy Data Network dataset for the period 2007 to 2015. The application of quantile regression models and their findings suggest that leadership skills have little effect on the growth of Hungarian family farms. In contrast to the effect of skills, the general characteristics of the family farms (such as farm size, farm type, and state subsidies) determine their growth. Smaller family farms grew faster than bigger family farms. The non-linear relationship between farm size growth and farm type as well as state subsidies is confirmed for different quantiles of farm size. The findings suggest that the ongoing process of family farm restructuring depends on the latter’s size and pertains to family farm characteristics and government policies. The market selection process of farms and farm restructuring, along with a decline in the number of farms and their size growth, is likely to continue due in part to climate change and the robotization and digitalization of farms and will be affected by the resilience of different farm types.