A Quantile Regression Analysis of the Effect of Farmers’ Attitudes and Perceptions on Market Participation

The objective of this study is to investigate the subjective determinants of farmers’ participation in output markets in five EU New Member States (NMS) characterised by large semi-subsistence sectors. It employs quantile regression to model market participation reflecting the heterogeneity amongst farmers. The study also uses the Bayesian adaptive lasso to simultaneously select important covariates and estimate the corresponding quantile regression models. The empirical results show that only two variables affect all quantiles, while their effect varies across quantiles. Some of the remaining variables affect the share of output sold at the lower quantiles (i.e. for subsistence- and semi-subsistence-oriented farmers) only, whereas other variables are only significant at the upper quantiles (i.e. for more commercially oriented farms). Advisory services, and particularly agricultural business advice, and information and advice on markets and prices can facilitate the market participation of subsistence-oriented farms

CAP Direct Payments and Distributional Conflicts Over Rented Land within Corporate Farms in the New Member States

This paper aims to investigate whether distributional issues within corporate farms in the New Member States will be exacerbated by the introduction of the CAP direct payments. The paper focuses on the specific impact of the payments on the land rented to the corporate farms by private landowners. If the latter are not satisfied with the level of rent they receive, they have the option to end their rental contract and withdraw their land from the farm. Before the accession to the EU the landowners did not have strong incentives to withdraw, as the other available opportunities were not associated with higher returns on land ownership. However, this situation might change as the landowners can now cash the direct payments themselves, providing they keep their land in good agricultural and environmental condition. Propositions generated by a simple game, representing the negotiations between a corporate farm manager and an individual landowner about the level of the rent, suggests that the CAP direct payments might induce more rent renegotiations but that overall withdrawals will be infrequent. The results from a survey of landowners in corporate farms in Slovakia and in the Czech Republic seemed to corroborate these a priori expectations. The investigation of the determinants of landowners' intended behaviour showed that what seems to be important in the decision-making is the relationship between landowners and managers. Landowners who have frequent contacts and close relations with the farm are less likely to withdraw.CAP direct payments, corporate farms, distributional conflicts, game theory, landowners, Agricultural and Food Policy, Land Economics/Use,

IMPLEMENTATION OF SINGLE AREA PAYMENT SCHEME IN THE EU NEW MEMBER STATES

The 2003 reform represents a significant shift in the EU policy, particularly in its movement to decoupled support. The potential impact of the reform depends on a range of factors including the modalities of its implementation and the structure of farming sectors in different countries. The then acceding countries had the flexibility to choose to implement the Single Payment Scheme (SPS) or to opt for the simplified Single Area Payment Scheme (SAPS). This paper attempts to provide a comparative overview of the level and distributional aspects of direct payments across seven New Member States (NMS) covering different sub-regions, the Baltics, Central and Eastern Europe, and the two most recent Member States from the Balkans – Bulgaria and Romania. Although the choice of 10 out of 12 NMS was similar – to implement SAPS – the preaccession policies, the structure of agricultural output and the distribution of farm sizes have created substantial differences in the distribution of support and the choices between decoupled and coupled Complementary National Direct Payments (CNDP) or ‘top-ups’. As expected, due to the phasing-in process there has been a tendency of increased payments per hectare over time; however this increase has not been uniformly manifested. The differences in the output structure and labour intensity, as well as the large differences in farm structures and farm size distribution have brought about substantial differences in amounts of direct payments per beneficiary and AWU. One of the countries with the most concentrated land use in large farms, some of them corporate farms (companies or co-operatives), are the Czech Republic and Slovakia. Hungary and Bulgaria occupy the middle ground, whilst the Baltic States, Poland and Romania are characterised by small size farms almost across the board. This variety across the NMS has substantial implications for several aspects of SAPS implementation and its beneficiaries, including the amount of direct payments per beneficiary, the average size of beneficiary and the share of holdings benefitting from the scheme. The share of beneficiaries varies from a small segment of the holdings covered by the Farm Structure Survey (FSS), as for example in Bulgaria and Slovakia, to covering almost all holdings included in FSS (Lithuania). One of the positive signals is that in some NMS the concentration of SAP on a small segment has been decreasing (although slowly) in parallel with the increasing farmers and administration experiences. All these structural and distributional differences mean that setting payments limitations or including (eventually) the NMS in a system of progressive modulation may have widely different effects on different NMS and thus may generate substantially different political positions. Analytical survey results are presented concerning the change (or the lack of) of farmers strategic plans as a result of the implementation of SAPS in two of the above NMS with contrasting farm structures and payment distribution. The results indicate that as the implementation of SAPS means more predictable and increasing payments in comparison to the pre-accession policy the main change in the strategic farmers’ plans is their increased willingness to stay longer in farming and increase the farm area operated. The expected response to 2003 CAP reform, namely lower incentives to produce and increased drive to diversification to non-farm activities was not detected in this early survey in NMS. However, it is difficult to disentangle the changes induced by SAPS from the general expectations due to accession to the EU.Single Area Payment Scheme, new member states., Agricultural and Food Policy, Political Economy, Q1, Q18,

Subsistence and Semi-subsistence Farming in Selected EU New Member States

Factor and cluster analysis are used to analyse the attitudes and perceptions of agricultural households in five EU New Member States towards farming, commercialisation, and barriers to and drivers for an increased integration in agricultural markets. The contribution of unsold output to the total household income is valued. A stepwise linear regression is employed to detect important variables explaining the degree of agricultural market integration of farm households. The analysis indicates that subsistence farming is of utmost importance for the rural poor, and particularly in Bulgaria and Romania. The proportion of consumption from own production, manual cultivation techniques and distance to an urban centre negatively affect output sales. Rural development policies targeted at rural physical and market infrastructure might relieve some of these constraints.agricultural households, subsistence, commercialisation, incomes, cluster analysis, stepwise regression, Community/Rural/Urban Development, Consumer/Household Economics, Crop Production/Industries, Q12,

Impediments to Employment and Enterprise Diversification: Evidence from Small-Scale Farms in Poland

In an environment of low returns to agricultural activities and slow structural change, both employment and enterprise diversification have been presented as possible strategies for raising the incomes of farm households. This paper focuses on the barriers to taking up off-farm employment and establishing new non-agricultural enterprises. Factor and cluster analysis are applied to a data-set of individual farms in Poland in order to identify groups of households facing similar constraints and profile policy measures that are most likely to assist diversification. The majority of non-diversifiers are unlikely to become pluriactive in the near future due to a combination of age, a desire to concentrate on farming and remoteness. Farm households that are willing to diversify are characterised by the lowest agricultural incomes. For these households, a poor endowment of human and physical capital is a major constraint.Poland, diversification, off-farm employment, non-agricultural enterprises, cluster analysis, Industrial Organization, Labor and Human Capital, R0, Q12,

Non-Agricultural Diversification of Farm Households and Corporate Farms in Central Europe

Consumer/Household Economics, Farm Management,

Leaving land fallow: The case of subsistence farming in the Western Balkans

The key question of this paper is why farmers in Kosovo leave land fallow when the total land of their farms is rather small and households are rather large. In order to elicit some barriers to land utilisation in Kosovo, the paper is based on a comprehensive survey investigating agricultural households’ perceptions of production and market conditions, and employs several households and farm characteristics to empirically approximate the significance of different factors for leaving land fallow and not using it for production purposes. Three different models have been estimated. All estimated model specifications show a statistical significance at a satisfactory level and no severe signs of misspecification. One of the main factors farmers stated for their decision to leave land fallow was the low profitability of farming. The increase in incentives to farmers by improving market institutions up- and downstream is one measure which could alleviate the barriers to land use. Larger arable areas decrease the probability for fallow land. This emphasises the need for land consolidation.fallow land decision, Kosovo, Tobit regression, Fractional response regression, Zero-inflated binomial regression, Research Methods/ Statistical Methods, Risk and Uncertainty,

AGRICULTURAL ADJUSTMENT AND THE DIVERSIFICATION OF FARM HOUSEHOLDS IN CENTRAL EUROPE

Survey evidence from three Central European Countries (Czech Republic, Hungary and Poland) is analysed to identify the degree of non-agricultural farm diversification and the factors facilitating or impeding it in individual farms. The effect of diversification on rural job creation is investigated. The results indicate that the level of diversification is relatively small and enterprise diversification by farmers is unlikely to generate sufficient new jobs and solve the problem of high rural unemployment. The attempt to transpose the Western European model of agricultural diversification to the acceding countries via the SAPARD programme is questionable, as non-farm centric rural policies appear to be more appropriate.Farm households, non-agricultural diversification, job creation, Central Europe, Consumer/Household Economics,

Performance of Different Institutional Units in the Czech Republic and the Role of External Financing

The paper analyses the relationship between the financial structure of the different institutional units in the Czech Republic and their performance, by testing several theoretical hypotheses. It employs Data Envelopment Analysis to estimate separately corporate and individual farms' technical efficiency, and investigates the effect of indebtedness on efficiency in a second stage, accounting for potential endogeneity. No substantial differences were detected between individual and corporate farms. For both groups higher long-term indebtedness negatively affects farm performance (agency theory and adjustment hypothesis), while the latter is used for appraising loan applications (credit evaluation). Case studies to banks and farms confirmed these findings.corporate farms, credit, Czech Republic, individual farms, technical efficiency, Agribusiness,