Does Human Capital Play an Important Role in Farm Size Growth? The Case of Slovenia

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doi:10.30682/nm2101d

Cited by 1 publication

(4 citation statements)

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“…Testing Gibrat's law has a long tradition, with mixed empirical results depending on the country, branch of farming/industry/sector, time/length of analysis, data and methodological approach, as well as the selection of control variables or other drivers of firm/farm growth (Bakucs et al , 2013; Akimowicz et al , 2013; Bojnec and Fertő, 2020, 2021a, b; Bojnec et al , 2022). If Gibrat's law holds, stochastic models of firm/farm growth should prevail and assuming a proportionate effect, exogenous random changes will drive firm/farm growth (Geroski, 2005; Ward and McKillop, 2005).…”

Section: Review Of Literaturementioning

confidence: 99%

“…Several studies have analyzed the validity of Gibrat's law for farm size growth in developed (Akimowicz et al , 2013), transition (Bojnec and Fertő, 2020, 2021a, b; Bojnec et al ., 2022) and both developed and transition economies (Bakucs et al , 2013). However, no study has thus far investigated farm size growth focusing in relation to liquidity constraints, farm debts and nonlinearity of farm size.…”

Section: Review Of Literaturementioning

confidence: 99%

“…Earlier agricultural economics and finance-related work investigated nonlinear associations between agricultural productivity, access to credit from formal and informal sources and farm size (Feder, 1985; Akudugu, 2016), as well as the effect of input credit on smallholder farmers' output and income. Farm size and its growth can be driven or mitigated by various factors related to farms (Bakucs et al , 2013; Akimowicz et al , 2013; Bojnec and Fertő, 2020, 2021a, b), resilience in food processing supply chain networks and food supply value chain characteristics (Jose and Shanmugam, 2020; Sharma et al , 2020; Prakash, 2022).…”

Section: Review Of Literaturementioning

confidence: 99%

“…The literature on the relationship between financial constraints and investment is presently increasing (Fertő et al , 2020, 2021). The gap in the literature is in another strand of research that focuses on the growth of farms (Akimowicz et al , 2013; Bojnec and Fertő, 2020, 2021a, b). The in-depth analysis regarding understanding of the role of liquidity constraints, farm debts and nonlinearity in farm growth dynamics is basically non-existent.…”

Section: Introductionmentioning

confidence: 99%

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Financial constraints and nonlinearity of farm size growth

Bojnec

Fertő

2023

JAMR

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PurposeThis article aims to investigate the financial constraints and nonlinearity of farm size growth.Design/methodology/approachFarm size growth is measured with land, labor and output using data from the Farm Accountancy Data Network (FADN) for Hungary and Slovenia. A dynamic panel model is applied to assess financial constraints and nonlinearity of farm size growth.FindingsResults show that, except for land in Slovenia and output in Hungary, liquidity constraints are less important for farm size growth than endogenous factors based on farm size growth expectations and steady farm size restructuring. Smaller farms are growing faster than larger ones. The hypothesis that a higher level of subsidies would increase farm size is not supported for Hungary. When farms reach a certain size, the land area of the largest farms increases. Farm debts in Hungary are linked with land growth and in Slovenia with output growth.Research limitations/implicationsFurther research on the impact of liquidity constraints and subsidies can be conducted at a disaggregate farm-type level to examine whether there is variability in the underlying interlinkages at the farm-type specialization level.Practical implicationsThe implication that farm size growth is dependent on initial size and that smaller farms are growing faster than bigger ones indicates that it is not necessary to favor the fastest growing smaller farms thus supports the application of a non-discriminatory farm size policy for observing farm size structural changes.Originality/valueThe dynamic panel econometric model that incorporates cash flow as a measure of financial constraints provides insight into farm size growth in cross-country comparison in relation to potential farm liquidity constraints, farm debt and the nonlinearity of farm size, which information is of relevance to policy makers and practitioners.

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