Panel Of Farms Research Articles

The productivity-environment nexus in space. Granularity bias, aggregation issues and spatial dependence within Italian farm-level data

This paper looks for empirical support to the existence of a positive nexus between economic and environmental performance in farming as implied by the Sustainable Intensification hypothesis. As the ecological scale at which this nexus actually occurs is unobservable, the paper juxtaposes its estimation at three spatial scales, the farm level and two regional levels. Starting with a common theoretical background, the paper estimates a dynamic spatial panel model on these alternative scales. Identification issues (granularity, aggregation bias and spatial dependence) may generate significantly discrepant estimates eventually questioning the reliability of these results. The empirical study investigates the relationship between total factor productivity, greenhouse gas emissions and crop diversity using a 2008–2018 panel of Italian farms. Results show that the productivity-environment nexus changes and may even revert its sign when passing from farm-level to aggregate data. The implications of these results for evidence-based policy making are discussed.

Highlighting the Drivers of Italian Diversified Farms Efficiency: A Two-Stage DEA-Panel Tobit Analysis

Farm diversification is an important phenomenon in agricultural systems and rural development in Europe, pursuing economic, social and environmental goals. For the sustainability of diversified farms, it is important to analyse some drivers affecting farm efficiency, for instance, socio-economic, technical and policy drivers. The efficiency performance of a panel of Italian farms practising other gainful activities in the period 2012–2017 was investigated and regressed against the drivers that mostly affects farm performances. FADN data and a two-step approach were used. An output-oriented Data Envelopment Analysis was applied; in the second step, efficiency scores were used as a dependent variable in a panel Tobit regression analysis used to determine differences in the significance of drivers. Social, economic, technical and policy drivers were considered as explanatory variables. Results show margins for improving farms performances. The incidence of the output from other gainful activities has been proven to positively affect farms efficiencies, while intermediate costs are the most negatively impacting factor. As regards policy variables and implications, the significance of localization in mountain disadvantaged territories further supports the relevance of EU subsidies in less-favoured areas. Managerial implications in terms of technical, structural and economic indicators can be drawn from study findings.

The Role of the Common Agricultural Policy in Enhancing Farm Income: A Dynamic Panel Analysis Accounting for Farm Size in Italy

AbstractAs a multi‐objective policy, the EU Common Agricultural Policy continues to secure significant income support for farmers as one of the nine specific objectives. We estimate the income transfer efficiency of a broad set of pivotal policy measures, focusing on the effects of farm structure on income transfer efficiency. We use dynamic modelling, based on a micro‐data panel of Italian farms for the period 2008–2014, allowing for endogeneity, simultaneity bias, and omitted variables. In line with previous studies and economic expectations, we find that decoupled direct payments provide the highest contribution to agricultural incomes, followed by agri‐environmental payments and on‐farm investment subsidies. Coupled payments have no significant impacts on farmers’ income. Generally, for all analysed Common Agricultural Policy measures, large farms benefit from greater transfer efficiency levels compared with medium and small farms. These differences among instruments and across farms suggest that policy‐participation costs may play a pivotal role, together with the economic structure of farms, in determining the income transfer efficiency of CAP policies.

The Measurement of Time-Varying Technical Efficiency and Productivity Change in Polish Crop Farms

The main aim of this study is to measure the technical efficiency and decompose total factor productivity (TFP) growth of Polish crop farms. The novelty of our contribution is threefold. First of all, our work contributes to research on agricultural performance of Central and Eastern European countries in the post-European Union accession period. Secondly, compared to previous studies, our study expands them by decomposition of total factor productivity growth for a specific sector based on a very extensive dataset, thus providing a more in-depth analysis of factors driving productivity growth. Thirdly, we have thoroughly explored the same data set by several different models, showing consequences of choosing a particular model. The empirical analysis is based on a balanced panel of farms, from 2004 to 2011, taken from the Farm Accountancy Data Network. Findings show that the average technical efficiency was only 63%. The elasticity of production was highest with respect to materials and lowest with respect to area. The capital elasticity was statistically non-significant. We point out that this sector is characterized by increasing returns to scale, with estimates ranging from 1.05 to 1.3 for the majority of observations. Furthermore, the results show that TFP was slightly decreasing (on average by 0.067% per annum) over the entire period.

Nonfarm Activities and Household Production Choices in Smallholder Agriculture in Vietnam

Nonfarm Activities and Household Production Choices in Smallholder Agriculture in Vietnam

Costs of a Practice‐based Air Quality Regulation: Dairy Farms in the San Joaquin Valley

AbstractFacing the difficulty of accurately measuring pollution from agriculture, economists have recommended regulatory approaches using proxies such as management practices to reduce agricultural pollution. Using farm‐level cost data on a panel of dairy farms, I estimate the effects of a practice‐based air quality regulation for dairy farms in the San Joaquin Valley in California. As opposed to ex ante analyses, my econometric results indicate that the air quality regulation has not significantly affected the total costs of milk production. Estimates also suggest that the regulation might have differential effects on different elements of costs. I support the econometric findings with evidence on how dairy farms comply with the regulation. Calculated adoption rates of different pollution‐mitigation practices using administrative data reveal that dairy farms have mainly adopted labor‐intensive practices to comply with the regulation.

Effect of agricultural policy on income and revenue risks in Italian farms

PurposeThe purpose of this paper is to assess how direct payments (DPs) of the Common Agricultural Policy affect income and revenue variability faced by Italian farmers.Design/methodology/approachBalanced farm-level panel data are used to construct coefficients of variation over the period 2003-2012. Nonlinear robust regression techniques are used to measure the effect of DP, farm size, fixity in resources, labor intensity, farm production orientation, and specialization on the variability of farm income (FI) and farm revenue. This is done on the overall sample as well as on subsamples of farms located in different regions and belonging to different types of farming.FindingsDPs have mixed effects on the variability of FI. While a negative and significant relationship is found on the whole national sample, this is not generally the case when models are run on the considered subsamples. On the contrary, DPs have always significant variability increasing effects on revenue. This suggests that DPs reduce the degree of risk that farmers face allowing them to engage in riskier activities. Thus, DPs are less effective than expected in terms of income stabilization because these distort farmers’ risk management behavior. Because of this, DPs could constrain the development of markets for risk management instruments and reduce the effectiveness of policies supporting the use of these instruments.Originality/valueThe analysis is inspired by El Benni et al. (2012) but uses a different approach, applies it to a different country, and yields different results. Volatility measures are calculated over more years, and the paper accounts for differences in farm production orientation and is not based on an unbalanced panel of farms. Because of these differences, the authors obtained different results regarding the correlation between DP and income and, even more, revenue variability. Finally, comparing the results of models referring to FI and farm revenue improves the author’s understanding of the impact of DP on farmers’ risk management behavior and allows interesting policy considerations.

An Estimated Structural Model of Entrepreneurial Behavior

Using a rich panel of owner-operated New York dairy farms, we provide new evidence on entrepreneurial behavior. We formulate a dynamic model of farms facing uninsured risks and financial constraints. Farmers derive nonpecuniary benefits from operating their businesses. We estimate the model via simulated minimum distance, matching both production and financial data. We find that financial factors and nonpecuniary benefits are of first-order importance. Collateral constraints and liquidity restrictions inhibit borrowing and the accumulation of capital. The nonpecuniary benefits to farming are large and keep small, low-productivity farms in business. Although farmers are risk averse, eliminating uninsured risk has only modest effects on capital and output.

An Estimated Structural Model of Entrepreneurial Behavior

Using a rich panel of owner-operated New York dairy farms, we provide new evidence on entrepreneurial behavior. We formulate a dynamic model of farms facing uninsured risks and financial constraints. Farmers derive nonpecuniary benefits from operating their businesses. We estimate the model via simulated minimum distance, matching both production and financial data. We find that financial factors and nonpecuniary benefits are of first-order importance. Collateral constraints and liquidity restrictions inhibit borrowing and the accumulation of capital, especially among high-productivity firms seeking to expand. The nonpecuniary benefits to farming are large and keep small, low-productivity farms in business. Although farmers are risk averse, eliminating uninsured production risk has only modest effects on capital and output. (JEL C51, D24, G32, Q12, Q14)

Movers and Stayers in The Farming Sector: Accounting for Unobserved Heterogeneity in Structural Change

SummaryThe paper investigates whether accounting for unobserved heterogeneity in farms' size transition processes improves the representation of structural change in agriculture. Considering a mixture of two types of farm, the mover–stayer model is applied for the first time in an agricultural economics context. The maximum likelihood method and the expectation–maximization algorithm are used to estimate the model's parameters. An empirical application to a panel of French farms from 2000 to 2013 shows that the mover–stayer model outperforms the homogeneous Markov chain model in recovering the transition process and predicting the future distribution of farm sizes.

To Mix or Specialise? A Coordination Productivity Indicator for English and Welsh farms

AbstractThis paper introduces a nonparametric measure of coordination productivity growth where the subprocesses are explicitly modelled in the production technology. The coordination productivity indicator is decomposed into a coordination technical inefficiency change component and a coordination technical change component. This decomposition allows assessment of reallocation impacts on the different sources of productivity growth. The empirical application focuses on a large panel of English and Welsh farms over the period 2007–2013. The results show that coordination inefficiency significantly increases with the proportion of resources allocated to livestock production in economic and statistical terms. Coordination inefficient farms should generally allocate more land to crop production. Depending on the region, the average coordination productivity growth ranges from −9.7% to 15.9% per year. It is driven by coordination technical change rather than coordination inefficiency change.

What Influences the Growth of Organic Farms? Evidence from a Panel of Organic Farms in Germany

Organic farming is one of the fastest-growing branches of agriculture in Germany. The net increase in the number of hectares comes partly from the conversion of conventional farms, but also in part from the acreage expansion of existing organic farms. So far, empirical research has focused on analysing conversion to organic farming, and lately on reversion to conventional farming. However, changes in individual organic farm sizes have remained ignored by empirical researchers. Additionally, the occurrence and the extent of farm growth are largely dependent on the regional conditions of land market, farm structure and policy measures. Therefore, it remains unclear what other factors besides increasing demand for organic products might influence growth of organic farms. The main objective in this study is to determine whether organic farms are changing their scale of operation and, if so, which factors contribute to – or stagnate – farm growth and to what extent. To answer these questions we analyse growth in a unique panel dataset of 453 farms over the 1993-2005 period using the system generalised method of moments estimator (SGMM). The results reveal that all farms increase area by a maximum of 10 ha and large farms change farm size more frequently than smaller ones. Increases in organic area are influenced by subsidies for organic farming and intensity of livestock production. Farm growth measured in terms of output is affected by farm size, land, capital, soil quality, and intensity of livestock production.

Intensive margin of land use in CGE models – Reviving CRESH functional form

In this study I suggest that computable general equilibrium (CGE) studies of land use change could benefit from more careful modeling of the intensive margin. That requires more attention placed on the production function.I support my claim with empirical estimation and corresponding CGE simulations. The empirical data is a farm enterprise panel of Finnish farms for years 2004–2009. I run two short run test simulations with the ORANI-G model: (1) land productivity improvement, and (2) decrease in agricultural subsidies.The empirical results favor the CRESH functional form over the prevailing Cobb–Douglas and CES forms. The CGE simulations show that the results are sensitive to the functional form choice. CRESH portrays weaker changes in land use in the first simulation than its alternatives. In the second simulation CRESH portrayed more land use adjustment than the CES alternatives. Cobb–Douglas was clearly the worst alternative in the empirical part and showed more diverging results in the simulation results as well. Accordingly, an inadequate treatment of intensive margin in land use CGE models might yield misleading conclusions and faulty policy recommendations.

Heterogeneous Farm Output and Technical Efficiency Estimates

Farmers in most OECD countries are engaged in different activities which go beyond agriculture. When assessing farm performance, it is appropriate to model these heterogeneous farm outputs separately. In this study, we use the distance function approach, which allows the consideration of technology with multiple outputs and multiple inputs. We compare estimates from single-output technology with estimates from multiple- output technology. Our empirical analysis is based on an unbalanced panel of dairy farms in the plain region of Switzerland for the period from 2003 to 2009. We choose the parametric estimation method and employ a translog specification of the production technology. The test of output separability favours a model that separately considers three different outputs: agricultural output; para-agricultural output; and direct payments. The separate modelling of direct payments has considerable influence on the estimated technology parameters as well as the technical efficiency scores. The consideration of direct payments as a separate output increases the elasticity of land by a factor greater than two and, accordingly, reduces the distance function elasticities of other inputs. The average technical efficiency estimates do not differ substantially when specifications differ. However, we reveal serious differences in the estimates of technical efficiency for individual farms. The estimated rank correlation coefficients show that the ranking of farms in terms of technical efficiency differs considerably when direct payments are modelled as a separate output.

Does market competitiveness significantly affect public intervention in agricultural insurance: the case in Italy

Analyses of agricultural insurance failures often assume the existence of competitive supply, tracing the reasons for high insurance cost and limited farmer participation to informational problems, and suggesting the need for premium subsidization in order to increase participation. However, in countries such as Spain and Italy, where agricultural insurance is most highly subsidized, it could be that supply is not fully competitive. In this article, we explore the incidence of public subsidies to agricultural insurance premia when supply is noncompetitive. Through the use of a simple empirical model of an insurance market, it is shown that, while in the case of a competitive supply, subsidies to insurance would benefit farmers, a monopolistic supply would capture most of the subsidy, thus eliminating the potential incentive towards wider participation by farmers. The model is applied to a panel of Italian farms for different levels of risk aversion to demonstrate the limited effect that a subsidy to a hypothetical all risk yield insurance would have on farmer participation in the case of monopolistic supply.

Scale, productivity growth and risk response under uncertainty

This study focuses on the analysis of the production behavior and risk preferences in the presence of output price uncertainty. Following a theoretical model based on the assumption of maximization of expected utility of profits, the approach used in this study infers information about risk preferences from the production characteristics of the farm. In addition, the nonparametric method of estimating elasticity of scale and technical change eliminates the need to impose a uniform production or cost functions on individual producers. The approach is applied to a panel of dairy farms, which are evaluated for their elasticity of scale and the total productivity growth components of their operations. Estimates of farmers' risk attitudes represented by individual marginal risk premiums are also related to socio-economic attributes of farmers. Overall, farm size plays an important role in explaining productivity and scale differences and has the most significant negative effect on marginal risk aversion. The magnitude of the impact of additions to the farm's dairy herd increases with scale of operations.

The damage-control effect of pesticides on total factor productivity growth

This paper develops a framework for analysing the sources of total factor productivity (TFP) changes by explicitly taking into account the damage-control nature of pesticides. In the proposed framework, TFP changes are attributed to the conventional sources of growth (i.e. technical change, scale effect and changes in technical efficiency) and the damage-control effect which consists of three distinct components: the first one is due to changes in the initial pest infestation, the second is a spillover effect arising from neighbours' use of preventive inputs and the third is related to abatement effectiveness. The proposed model is applied to a panel of olive-growing farms in Crete, Greece, during the period 1999–2003. The empirical results indicate that the damage-control effect accounted, on average, for 5 per cent of the annual TFP growth and its main component was the improvements in abatement effectiveness. , Oxford University Press.

Assessing productivity change with SFA in the sheep sector of Greece

The objective of this paper is to measure total factor productivity growth in a panel of sheep farms in Greece and assess the relative contribution of technical change, technical efficiency change and scale efficiency change in observed productivity growth. Such decomposition can be useful in planning well defined policies which can support the sector’s sustainable development via the optimization of input/output use. A stochastic frontier production function approach is adopted and maximum likelihood is used to estimate the parameters. The data used for the econometric estimation are obtained from the Greek Farm Accounting Data Network for the period 1997–2002. TFP has been growing in the sector but at a diminishing rate. The major determinant of productivity growth is technical change, which has been shifting the frontier by 2.4% on average during this period, but is counteracted to some extent by technical and scale inefficiency each reducing TFP growth by about 0.3% p.a.

An Intra-farm Study of Production Factors and Productivity for Shrimp Farms in Bangladesh: An Index Approach

The production characteristics of shrimp farming in Bangladesh are reported based on a panel of farms for the period 1998 to 2002. The data allow for a profit decomposition based on the Tornqvist index, where differences in relative profits can be explained by differences in productivity, prices, and pond size. The indices indicate that pond size is the most important factor in determining profitability and that the largest farms are the most profitable. However, productivity measured as profit per hectare is only weakly positively correlated with pond size. In fact, the smallest ponds rely more on productivity in generating profit relative to the most profitable farm. These results indicate that small farms are disadvantaged not because they lack the skills to manage, but because the farms are too small. The challenge for Bangladeshi policy makers is to devise methods and procedures to allow small farmers to expand pond size.

An Sgm Restricted Cost Function Approach To Technology And Efficiency In A Panel Of Kwazulu-Natal Dairy Farms

The work reported here used a short-term specification of the symmetric generalised McFadden (SGM) cost function capable of incorporating quasi-fixed factors and variable returns. Temporary equilibrium and scale economies were investigated while maintaining the consistency of the estimated model with microeconomic theory and approximation properties. The methodology also makes use of a two-step procedure to estimate first the technology parameters and then time-varying efficiency at farm level. No distributional assumptions are required on efficiency as a fixed effect model was considered. A balanced panel of dairy farms in KwaZulu-Natal during the years from 1990 to 2002 was used for the analyses. The results show a rigid productive structure during the study period. In addition, milk producers in KwaZulu-Natal were found to exhibit considerable excess capacity and rather low input technical efficiency.