Farm succession at a crossroads: The interaction among farm characteristics, labour market conditions, and gender and birth order effects

Abstract

Farm succession is a relevant issue, as it is related to rural and youth migration, sustainability and the ageing of the agricultural sector. Understanding the factors behind the willingness of potential successors to take over the family business is crucial for farm continuity. We examine the factors affecting children's likelihood of carrying on the family business in a sample of 216 potential heirs of Italian horticultural farms. Using local labour market conditions (income gap and employment rate) and surrounding context variables (population density), we plug the farm labour migration/occupational choice theory into farm succession analysis. This approach allows us to treat child succession as the opposite of the choice to migrate out of the farm sector. While farm labour migration theory predicts linear negative effects of labour market/contextual variables on farm transfer, we find that the income gap, employment rates and population density exert both negative and positive effects on child succession, according to their intensity. The pro-succession effects we find suggest that, despite potential threats, the proximity to wealthy areas may represent an opportunity for farm continuity and thriving. We also examine explicitly the effect of child characteristics (gender and birth order), finding that male and first-born potential successors are more likely to take over the family farm, in accordance with results from previous firm succession studies. This finding suggests a persistence of traditional normative beliefs in the agricultural sector.

Generational Changes in Agriculture: The Influence of Farm Characteristics and Socio-Economic Factors

“…The issue of generational changes in agriculture has an increasingly important place in the economic and agricultural literature [16,[19][20][21]. This is due to the great social, economic, environmental, and political significance of family farming.…”

“…The literature on determinants of family farm succession indicates that three main groups of factors are important, namely farm, farmer, and farm household characteristics [29,30]. Moreover, it is pointed out that an important role is played by exogenous factors, including environmental and location factors [16]. These factors include the interplay between farm and territorial factors (rural-urban relationships) [29].…”

“…These factors include the interplay between farm and territorial factors (rural-urban relationships) [29]. However, the location factor is not perceived in a classic way, i.e., in terms of the distance from the market, but rather as a set of socio-economic conditions that impact the existence of benefits and costs connected with conducting agricultural activity at a given location [16,31]. The advantages/disadvantages of location are a product of the effects of agglomeration and urbanization, as well as environmental conditions or even historical and cultural factors.…”

“…On the other hand, the proximity of a metropolis may provide a chance for the development of multifunctional agriculture [39]. Numerous examples of agricultural farms both in Poland and other countries show that urban and peri-urban areas are suitable for development of: local food farms, leisure farms, social farms, and many other multifunctional facilities [16,18,[40][41][42]. The research literature emphasizes that the key to succession is choosing the right adjustment strategy that will facilitate economic success and farm succession [14,43].…”

“…The issue of generational changes in agriculture in metropolitan/peri-urban areas is one which has been addressed relatively rarely [16]. Similarly, the impact of exogenous factors, including socio-economic ones (especially in urbanized areas), on structural changes in the agricultural sector has not been analyzed very extensively [17,18].…”