The aim of this paper is to analyze funding strategies adopted by family farms with reference to rural development plans. More precisely, it looks into the influence of demographic variables on obtaining funds from the rural development policy: we define as “consumption of policy” the farm’s ability to obtain funds from rural development policies.
A general characteristic of the agricultural sector in many European countries is the presence of an overlap between the productive and domestic spheres, that is farms’ strategies depend on the family situations (Jervell 1999. According to Gasson et al(1988), family farm businesses are related to situations where:
the principals are related by kinship or marriage,
business ownership is usually combined with managerial control, and
control is passed from one generation to another within the same family.
In this context, any boundary between productive and reproductive work in the farm household is artificial (Errington and Gasson 1993) and conditions farms’ strategies and aptitude to invest: the number of family members and localization in the life cycle could be relevant variables of influence. In a lot of cases, demographic transition, either vertical or oblique (Bergstrom 1996), is stimulated by policies aiming at favoring intergenerational transmission. Besides, other investments are necessary to maintain a farm’s profitability and its persistence over time. In order to cope with an even more competitive scenario and to secure a family farm’s resilience, a mix of strategies has to be carried out (Darnhofer 2010).
Recent rural development polices make a set of instruments available in order to sustain farm competitiveness and to diversify agricultural income. The possibility to obtain funds is influenced by a set of constraints which, in many cases, reduce the consumption of policies. In this situation, an interesting field of analysis is the influence of demographic variables in accessing rural policies.
After presenting a brief theoretical overview, the paper proposes an empirical test within an Italian region (Lazio), where the odds of gaining access to rural development policies will be examined through a logistic regression model. The paper sustains the hypothesis of differentiation in the access to policies, due to demographic factors in the composition of family farms.
As Offutt (2002) points out, since farm households are demonstrably diverse, analysts would seem obliged to investigate hypotheses about differential response and impact. One of these differences concerns demographic variables: family contexts are particularly favorable to set up a farm venture (Jervell 2011): an abundant economic literature has emphasised the strict connection between farm household strategies and style of farming (among others, Whatmore, 1994), by demonstrating the persistency of family farms (Sabbatini 2011). Their ability to survive over time witnesses the relevance of F-connection1 in fostering lower levels of transaction costs and a higher aptitude to adapt (Ben-Porath 1980; Pollack 1985; Corsi 2009).
Social approaches to this theme underline the relevance of non-profit decisions in maintaining farming activity (Kuehne et al2010). For example, some researchers emphasize the relevance of family identity in strengthening the links between the future and past family history (Burton, 2004). Furthermore, a sentimental attachment to the place (place dependence and place identity) reinforces the links between farmer and farming and delays the eventual decision to retire (Kuehne 2012). However, in many other cases financial constraints are determining factors, thus inducing the abandonment of activity. To avoid this, agricultural policy offers financial support to promote farm adjustments.
Some authors have recently stressed the role of the Common Agricultural Policy in preserving small farms (Koutsou et al. 2011), through the process of the functional repositioning of agriculture, as a result of deepening, broadening and regrounding, and through the creation of rural webs (van der Ploeg and Marsden 2008).
As a matter of fact, family farms are expected to play an important role even in the new scenario of “modern rurality” designed within the rural development policies (Abdelmalek, 2000). Family units are requested to face competitive challenges through the definition of farm strategies, which are generally overlapping with family strategies (Caillavet et al2005; Abdel 1997). In this context a relevant subject of analysis is related to the capabilities of gaining access to rural development policies, which contain a set of measures to sustain either farm competitiveness or diversification, along sectorial or territorial trajectories of development. This ability could be decreased both on the supply and the demand side. From the supply standpoint, a large literature taking origin from Downs (1957) work has demonstrated that deviations emerge in a context of public choice. As far as demand is concerned, collective action theories evidence the relevance of pressure groups in conditioning policy decisions (Olson 1965; Becker 1983)2.
The impacts of agricultural policies on farms’ structural adjustments are analysed also within agent-based models (Balmann 1997; Albisser and Lehmann 2007; Balmann et al. 2003), which endogenise the importance of psychological and social factors which interfere in the farmer’s strategy definition. They are considered to be a useful tool to evaluate agricultural policy impact (Berger 2001; Happe 2004). More recent studies have emphasized the relevance of territory, social capital and socioeconomic farm characteristics in obtaining access to rural policies and fostering local rural development (Sabbatini, 2008; Meert et al., 2005; Marotta, 2007; Casieri et al., 2010). The inclination to adopt rural policy, that is to receive subsidies within the rural development framework, is variable and could depend on socio-demographic characteristics of the farm: family size, presence of young farmers and localization in the life cycle are influencing factors that should be examined in depth. As a matter of fact, consuming policy is a costly activity in terms of time spending and opportunity costs; in addition, informational asymmetries represent an important barrier to access. To overcome these obstacles, farmers have to improve their attention: neo-Austrian perspectives permit to get a better comprehension of the decision processes through the concept of entrepreneurial alertness (Kirzner 1973).
In the Kirznerian perspective, the entrepreneur is characterised by the aim to increase profits: to this end, he or she must pay attention to opportunities. Kirzner (1997) makes reference to the concept of alertness to summarize the entrepreneur’s aptitude to take advantage of opportunities. Access to rural development policies becomes a way to support farm adjustments.
The decision about consuming or not and about what measures are better to adopt could be influenced by demographic variables. As thoroughly demonstrated in literature, demographic variables are commonly recognized as explanatory factors influencing farm strategies: family composition and localization in the life cycle are determinants of different paths of development. What does the term demographic really mean? Should one refer to all the members of the family, or to the members effectively employed on the farm? Are there any differences if considering one or the other typology of family farms? Our paper sets in this context and aims at analysing the influence of demographic variables on the farm’s decision to adopt rural policies. By proposing a two-way classification of family farms, the hypothesis under analysis is that possible differences in the access to rural development policies could emerge. The research is conducted through interdisciplinary approaches which privilege a demographic perspective of analysis, where the fundamental elements are related to farm family traits.
To this end, after a brief methodological note our analysis proposes an empirical test of the access to rural policies, within an Italian region (Lazio). The hypothesis under study is that family composition influences the consumption of policies.