In 1975, the EU priority in the LFAs definition was the farm income level. In 2005, the focus of EU attention shifted to the natural handicaps suffered in the regions, preferring them as criteria to define LFAs for socio-economic consideration (Castel et al. 2011). Nowadays, the situation has not basically changed.
To deal with the exodus from farms located in LFAs, the abandonment of agricultural land, and the loss of biodiversity, rural cultural heritage and, in broad terms, the country’s history and culture (Cooper et al. 2006), direct EU payments for farming represent pivotal income support for family farm businesses within LFAs (Takayama et al. 2019). However, they cannot lead to achieving the goal of maintaining the population in these areas if the farm families operating in such areas are not adequately paid for their work.
In this study, we examined the ability of farms in the LFA of Montiferru to reward family work by adopting diversification strategies through the establishment of agritourism.
First of all, the analysis focused on the diversity of revenue and the relative sources among farms. We found that such characteristics cannot be associated with specific business farm models (Broccardo et al. 2017) but are preferably linked to the ability of individual farms to use their resources and to differentiate the activity. We observed a sensitive heterogeneity among selected farms that allows us to assume that they operate in different development phases based on the theoretical model proposed by Arnold and Staudacher (1981). Some farms would be placed in the initial phase of development, e.g. few beds and no reduction in agriculture labour in favour of agritourism. The consequence is a lack of presence, which can lead to a deficit situation. This is because the Montiferru region is in the involvement stage of Butler’s model (1980) and is attracting near-allocentric seasonal tourism, which, moving from the most renowned areas of Sardinia, asks for more adequate structures. Certainly, the level of seasonality “undermines business profitability and the capacity to reinvest and renew the infrastructure” (Pulina et al. 2006, p. 1014). Moreover, the seasonality issues affect also the other main activity. Arru et al. (2019) found that especially restaurant services are not fully utilised in agritourism in the Montiferru region—since these services are calibrated taking into account the highest summer tourist flow—making agritourism farms inefficient. However—even if it is a remote hypothesis—at the basis of low rate of efficiency in restaurant services might be the lack of adequate skills in agritourist farmers (e.g. depending on the development stage in which they lie). Farmers should provide a broader range of services and attractions to deseasonalise the business and thus supplement the income and boost employment (Pulina et al. 2006; Arru et al. 2019).
In this study, we found that capital intensification is not sensitively related to profitability, or at least the ability to increase the family income. These data could depend on the inefficient use of services, especially restaurants, as reported above, depending, on the one hand, on the seasonality of such activities (Parte-Esteban et al. 2015; Mhlanga 2018), and, on the other, by the fact that these farms are operating in the initial phase of development.
Another group of farms would be placed in the second phase of Arnold and Staudacher’s model, showing an adequate balance between agriculture and tourism. On these farms, agriculture and tourism revenue are quite equal to each other and are often reinvested in agriculture.
The “prevalence constraint” in favour of agriculture would be respected in terms of revenue or use of labour (the labour used for agritourism cannot overcome that used for agriculture). The labour factor explains the critical role played by tourism activities in generating farm profit. Indeed, they are family businesses that took the multifunctionality path not only to increase their sources of income but also to make their farms autonomous with regard to the family’s occupational needs (Cardillo and Cimino 2017). The data suggest that farm family members find job opportunities on the farms and that these chances increase with increased agritourism activity. On the other hand, a great prevalence of agritourism within agricultural practice can lead farms to inefficiency, especially in labour use, due to the need to ensure prevalence in agriculture work, and it can affect the ability to achieve satisfactory remuneration.
Indeed, the last group is composed of farms where agritourism is the main activity, and therefore they are in a phase characterised by the importance of diversification in the farm strategy. However, we found that this high specialization in agritourism is not correlated with the economic dimension of the farm, implying, among other things, that strategies highly devoted to diversification are also promoted by small farms even if their economic performance is generally unsatisfactory.
The labour productivity results are linked to production size. This implies that more efficient use of labour is one of the main tools for achieving a good level of economic production. Therefore, on these types of farms, it is important to balance three needs: rational labour allocation, and respect for the prevalence of agriculture practice in terms of labour involved and/or revenue achieved.
Another important point to consider concerns the ability of farms to generate congruous WFI. Only two companies are able to remunerate the work of family members equal to the minimum wage and, as a consequence, to be (more or less) profitable. Resuming all these arguments, we can conclude that, on the one hand, agritourism generates jobs for farm family members, but, on the other hand, this labour, which is defined in reference to the hourly labour cost established by the provincial rates, is not adequately remunerated or, in some instances, is not rewarded at all. Therefore, the choice to pursue a path of differentiation allowed these newly established farms located in LFAs to integrate the farm income, although it is not enough yet.
This result can be analysed through a double reading. The first interpretation considers the farmer incapable of valuing his work. As shown by previous studies on agritourism (Phelan and Sharpley 2011), although agritourism has become more established as a means to integrate farm income, this development path can be affected by the lack of key business competencies needed for success. This, in turn, impacts LFA development, and this lack of skill needs to be addressed through training courses to support agritourism farmers. In particular, on need programs that take into account the special relationship between the farmer and the farm that has to see as business (Vik and McElwee 2011). The farm understood as a firm (Tohidyan Far and Rezaei-Moghaddam 2019) required a more market-orientation in order to survive (Phillipson et al. 2004; Meert et al. 2005; Jones et al. 2009), and farmers have to increase their managerial knowledge to respond to the growing demand for food and rural tourism demand adequately. Indeed, “the recognition of business opportunities and strategic planning are major requirements for farmers. Through this, farmers are able to find ways and strategies to create a profitable business” (Vik and McElwee 2011, p. 392).
The second interpretation arises from the fact that farmers and their families generally live on the farm and consume the products obtained from the activity, and often their first goal is to achieve socio-emotional well-being. Such forms of revenue are hardly summarised to a synthetic economic value that can be added to the NFR. Furthermore, the value they attach to lifestyle is never included in the balance sheet analysis.
If the farm’s goal is to obtain the highest level of WFI, not all farms achieve it. However, the challenge must be not only to make the WFI positive, but also to generate a profit that allows farms to increase the range of possible strategic choices; to favour economic, social and environmental resilience; and to overcome the vulnerability of rural areas. The demand for recreational activities on farms has increased over the last decades and is expected to increase in the future (Barbieri et al. 2016). The development of agritourism allows farmers to capture new food tourists’ demand (Hall et al. 2004) and increase the agricultural production that can be sold, raising farm income and encouraging farmers to seek new innovative strategic paths that increase their profit. More generally, given that food tourism is pivotal in regional tourism promotion, which, in turn, is a vital element of agricultural development (Hall 2003), agritourism in LFAs may be an appropriate response to farms’ income problems.
Moreover, a noteworthy fact that cannot be attributed to the case is that one of the two companies showing positive results is the only one connected to a path of enhancement of local products, the Malvasia di Bosa wine route. This route draws on the main products of the area in order to promote the territory, and with it the wineries and agritourism, as well as hotels and restaurants, through the different paths of landscape—environmental and cultural interest. Furthermore, four other companies belong to national associations, two to LAG, and one has joined a consortium aimed at protecting indigenous grape varieties and local specialties. These data show the potential benefit of including agritourism in food and wine routes, which provides a chance to show up for the increasing demand for food experiences.
Our analysis shows the potential of agritourism to be a valid tool to support farms in LFAs. However, when the strategic objective is to avoid farm families leaving these areas, their work must be given a fair return. The challenge is to ensure that these farmers, whether they want to stay in the market and develop an increasingly competitive tourism market, embrace the challenge of changing their goals and creating businesses that maximise profit. Wider and greater tourism supply, as well as greater business skills and adherence to food and wine routes, can be viable options for the future.
The main impact of this study lies in considering the role of working farm income in determining the achievement of farm goals. The analysis of overall economic farm profit (Deepashree 2013) including both explicit and implicit costs allowed us to evaluate the opportunity cost of a farmer and/or his family members working on the farm. Indeed, although the socio-emotional factors cannot be ignored, the study of LFAs cannot disregard the analysis of a farm’s ability to pay for all the resources used in its activity. Farmers are called to transform their agritourism in terms of structures and mentality (Ciolac et al. 2019) inasmuch, although the achievement of long-term profitability may not be the firm’s purpose, it is a condition for its continuity and growth (Brunelli and Carlo 2019), as well as to create new wealth and wellness for rural community.
A final remark comes from the need to increase the business skills of farmers and their family members as well as highlighting exposure opportunities in the channels that most attract food tourism demand.
With reference to policy issues, it is well accepted that agritourism integrates farm income, and conserves and creates value for rural area (Broccardo et al. 2017). Nevertheless, because cooperation and networking skills are pivotal prerequisites to realise business opportunities (Vik and McElwee 2011), business skill development programmes and the promotion of local operator networks are needed in order to avoid the depopulation of LFAs and care for the landscape. Several companies are in the first stage of Arnold and Staudacher (1981), and their structure is not adequate to respond properly to the growing food and rural tourism demand. However, due to the reasonable circumstance in which less profitable businesses have a lower chance to access to capital and vice versa, the state or local government authorities can make easier access to external financial resources, for example, developing programs that would financially support agritourism with their initial fixed costs. Although in the new Common Agricultural Policy (CAP) there is an “intervention group” aimed at supporting investments, tangible and/or intangible, which contribute to the achievement of the specific objectives of the PAC, the above purpose clashes with the 14.7% reduction in the EAFRD fund allocation for Italy (European agricultural fund for rural development) for the 2021–2027 period. It should be noticed that the eighth key objectives of the future CAP “Vibrant Rural Areas” aimed at favour jobs and growth in rural areas has to deal with the peculiarity of farm entrepreneurs and the fact that “farmer are motivated by things other than financial reward” (Vik and McElwee 2011, p. 393). The European Union must invest in programs that push towards a change in the mentality of the farmers, who have to look not only at socio-emotional well-being and accounting profit, but also overall economic profit. Only the latter can be a valid measure of farm efficiency in achieving the goals, i.e. farm families being rewarded for their work, and obtaining a profit that makes the strategic choices for farm survival actually feasible.
In addition, in light of the other key objectives of CAP 2021–2027 inspired by the environmental, social and economic dimensions of sustainability, and the role of recreational activities in sustainability promotion, and good agricultural practices encouragement, with a positive impact on farms, households and rural territory development (Tew and Barbieri 2012; Mastronardi et al. 2015; Flanigan et al. 2015), it is particularly important that policy-makers promote a shift of perspective of farmers perhaps too focused on subjective success factors (Mäkinen et al. 2009) towards a new agritourism business model that aims to increase firm’s profitability—that is in line with “with economic and non-economic benefits for society and the local community” (Broccardo et al. 2017, p. 2). This represents a viable option for overcoming the lags of farm income behind the rest of the economy. Finally, in light of the advantages offered by the network of local entrepreneurs and the “g” group of CAP “cooperation” interventions, the activity of the States should be directed towards the development of these activities in the LFAs areas.
In terms of academic implications, this study shows the need to expand research on LFAs in terms of analysing the elements that can contribute to maintaining the population in these areas, starting from the farms’ overall economic profit. There are clear limitations to the case. First is the small sample size, although it covers nearly all agritourism in the area. Second, it relates to one specific Italian region. Clearly, further large-scale studies or comparative studies in other LFAs are needed, but the study provides a sound starting point.