Impact of business transfer on economic performance: The case of Italian family farms

Abstract

The impact of business transfer on family business performance is widely explored in the literature, but is neglected for agriculture although family farms are key players in the economy. We investigate whether the succession changes the economic performance of family firms for Italian family farms during the period 2008-2014. Our results show that succession on these family businesses has a negative effect on their economic performance related to capital, due to an increase in capital after succession. A policy implication is that support for investments of farm new entrants should be improved.

Farm Investment and Adoption of Fixed Milk Price Contracts on Irish Dairy Farms

“…Hypothesis 5 -Number of children in the household -where more children of a younger age might affect investments on farm in both possible directions -positive or negative. Positive because having a farm successor is associated with higher investments (Wright and Brown, 2019;Bertoni et al, 2023) but there might also be a negative association due to a higher cost of education if they are school or college going age, so farmer's might tend to invest less due to higher cost of living.…”

The role of family life‐cycle events on persistent and transient inefficiencies in less favoured areas

“…Creating a succession plan is commonly found to positively influence on‐farm decision‐making for both production and environmental activities (Barnes et al, 2016; Suess‐Reyes and Fuetsch, 2016). A succession plan formalises the process of handover as well as the changing roles and responsibilities of family members (Bertolozzi‐Caredio et al, 2020; Bertoni et al, 2021; Coopmans et al, 2021; Rech et al, 2021). Accordingly, a succession plan would be expected to influence transient inefficiency, as the handover and acquisition of management skills may cause short‐term perturbations, but also address persistent inefficiencies due to a long‐term change in the farm's investment pattern post‐handover.…”

“…A related aspect is the process of retirement. As the farmer approaches retirement then investment may increase after a farm successor has been identified, or disinvestment will occur if the farm has no successor (Bertoni et al, 2021; Zagata & Sutherland, 2015). A retirement variable would explain the effect of increasing or decreasing persistent technical inefficiencies due to either investment increasing or being run down as the farmer withdraws from the business.…”

“…Although there is no effect on transient efficiency, a retirement age of less than 10 years has a negative effect on persistent efficiency. Bertoni et al (2021) argued that retirement indicators may reflect both handover of the farm business and exit, which could lead to opposing effects on investment. Accordingly, here we find that retirement may be more reflective of a running down of the business or the reduction of efforts as farmers near retirement age (Brown et al, 2019).…”

“…However, the role of farm family life‐cycle factors as determinants of TE has been less well explored. Specifically, key events such as succession and retirement have been ignored in TE studies but have been found to be major causes of change in resource allocation on the farm (e.g., Bertoni et al, 2021; Suess‐Reyes & Fuetsch, 2016; Sutherland et al, 2012).…”