Tag: off-farm income

This paper analyses the composition and volatility of the total income and wealth of dairy farmers and the importance and volatility of the different components contributing to their total income and wealth based on Dutch FADN data. The results confirm some existing findings on the stabilising impact of CAP subsidies and off-farm income on farmers’ total income. The paper extends the existing analyses by exploring the impact of taxes on income volatility and the important role of savings in stabilising consumption of farm households. In this paper we show that a broader perspective (including off-farm income and wealth) provides a more realistic picture of the income and wealth effects as experienced by farmers.

The analysis in this paper estimates micro-economic drivers of diversity in crop production in Afghanistan with particular emphasis on the implications of household access to non-farm income. Descriptive analysis shows that a third of farmers do not diversify, while the majority of those that do, grow only two or three crops. Econometric analysis reveals that while landholding size, farm characteristics and assets, and proximity to markets significantly increase diversification, a significantly lower degree of diversification is found for households with higher non-farm income. This is consistent with the hypothesis that allocation of farm labour away from non-farm activities decreases diversity due to negative labour effects, perhaps because the opportunity cost of farm labour is higher than rural wages. Identification through instrumental variables confirms endogeneity in off-farm income, revealing that unobserved factors such as risk-aversion behaviour and relative efficiency may drive household decisions to diversify into both non-farm activity and crop mixing.

Given the increased attention to risk management in the European Union’s (EU) Common Agricultural Policy (CAP), it is important to monitor and evaluate the rates of adoption by farmers and their determinants over time. Current European agricultural statistics (Farm Accountancy Data Network) capture few indicators that assess such strategies, but complementing data collected during the EU Framework 7 project FLINT have allowed the adoption of risk management strategies and the determinants of farmers’ preference for complementary or substitute instruments to be assessed. Adoption rates of risk management instruments such as insurance contracts, price contracts, off-farm income, other types risk of reduction measures and other gainful activities vary signifi cantly across EU Member States and farming types. Econometric analysis indicates that larger farms more often adopt crop insurance, occupational accident insurance, price contracts and diversifi cation but are less likely to adopt credit avoidance and off-farm employment (at a signifi cance level of 1 per cent). For policy analyses these indicators are a step forward for the determination of the net impacts and establishment of counterfactuals in the long term (i.e. time series encompassing also adverse years) for measuring the impact of the CAP at farm level.

This paper illustrates the regional diversity in terms of the agricultural income of economically weak farms in Poland (i.e. from 2 to 8 ESU). The results, expressed as average values for 2005-2009, indicate that farms are finding themselves in a very difficult situation. Furthermore, the assessment included farms that gained their income not only through agricultural activity, but also through doing non-agricultural work. The diversification of income sources created the opportunity to sustain less profitable agricultural production while providing a higher standard of living for farmers and their families. Such factors as the intensity of production, and the productiveness of current expenditures and fixed capital, as well as the financial position of the farms and the level of their debt, have been analysed. An important aim of the study was to identify the influence of the Common Agricultural Policy on the performance of farms.