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Modelling farm structural change (SiAg)
Project
Project code: TI-BW-08-PID1475
Contract period: 01.01.2008
- 31.12.2013
Purpose of research: Inventory & Assessment
The number of farms has declined by 50 % over the last 20 years. There is no end in sight to the rapid structural change. Policy and economic environment influence agricultural structural change in many ways; the details of many the related processes are still unexplored. For example, what are the impacts of globalization, and the attempts to regulate the markets? How will farm numbers develop in the future? And how will the freed resources – e.g. arable land – be re-allocated among remaining farms? So far very few existing applications try to answer these questions. Due to data availability, these studies generally use normative or ad-hoc decision rules on farm exits. Within the DFG-research group SIAG we intend to close this gap. We combine a model which explains the probability of a farm to exit the sector on the basis of observed developments, with prospective modelling of farm adjustments and selected factor markets (e.g. the market for agricultural land). We draw on farm-individual information from farm structural surveys for 1999, 2003 and 2007 and economic information from farm accountancy data for Germany. Our model explains farm exit probability depending on current and expected future profits and the expected development of competitors (e.g. neighbouring farms competing for land). We also take into account farm and regional characteristics which influence the strategic behaviour of farms (Margarian, 2010). The econometric exit model is iteratively coupled to the representative farm group model FARMIS. This approach enables ex-ante analyses of complex policy reforms.
Section overview
Subjects
- Resource management
- Agroeconomics