The factors affecting the motivation to exit farming – evidence from Estonia

Abstract

After Estonia restored independence, the number of individual farms increased rapidly during the 1990s. Since 2001, the number of farms has substantially decreased. Therefore, based on the survey data, this paper aims to explore the factors underlying the motivation to exit farming in Estonia. Cluster analysis is used to form relatively homogeneous groups of farms, and to investigate between-group differences in the motivation to exit as well as other farm characteristics. Logistic and ordered logistic regressions are applied to estimate the effects of selected variables on exit probability. The study reveals that the farms that are least likely to exit are large-scale farms and small-scale family farms. In small-scale farms, a reliance on family labour and a diversification of activities reduces the exit probability. The size of agricultural area was found to correlate negatively to exit intentions, while a higher share of rented land increases the exit probability. Also, the health of the farmer and the renting out of land are significant determinants to farm exit.

Handing down the farm? The increasing uncertainty of irrigated farm succession in Australia

“…Inwood and Sharp (2012) suggested that those who were winding down in preparation for a farm exit in the absence of a successor were more likely to be implementing negative farm adaptations, while those undertaking normal and positive adaptations did so in preparation for additional family members. Identifying and nominating a successor can trigger development of the business and provide a powerful motive for ongoing investment in the property (Gasson and Errington, 1993;Potter and Lobley, 1996;Mishra and El-Osta, 2007;Calus et al, 2008;Viira et al, 2009). When a successor is identified, the focus of activity and planning is farm viability.…”

“…Given the increased difficulties associated with farming, the size of debt successors need to take on, and the inherently uncertain future, some farmers have referred to intergenerational transfers as 'a form of child abuse' (Barclay et al, 2011: 5). Within Australia and elsewhere, it is clear that the number of farms being transferred to a successor is declining (Calus et al, 2008;Viira et al, 2009). In a national survey of Australian farmers (n ¼ 860) in 2000, 60% of respondents resided on properties previously owned by their parents or parents-in-law, but only 29% had the expectation that their farm would be run by a child or other relative in the future (Reeve, 2001).…”

“…Age is associated with a heightening awareness of the need to make succession plans and to make irreversible long-term decisions regarding the future of the enterprise. Viira et al (2009) suggested that early succession planning provided an incentive to invest in the farm and improve management, while farmers in their late 50s who had not identified a successor typically begin to disinvest in their properties. Age may be an indicator of the legal structure of farms, however.…”

Succession Planning and Perceived Obstacles and Attractions for Future Generations Entering Beef Cattle Production

“…However, the size, value, and sustainability of an operation may be directly dependent on identification of a successor. Studies have documented that farms with an identified successor are more likely to invest in assets, new technology, and business development than those that do not have an apparent successor (Potter & Lobely, 1996;Mishra & El-Osta, 2007;Calus, Van Huylenbroeck, & Van Lierde, 2008;Viira, Poder, & Varnik, 2009;Inwood & Sharp, 2012). Furthermore, as each generation becomes further removed from the farm, perhaps due to years of aging operators not envisioning retirement for themselves (Baker & Epley, 2009;Kirkpatrick, 2013), the pool of beginning operator candidates who have the technical and tactical expertise, in addition to the necessary capital, to become principal operators themselves is shrinking.…”

Competitiveness of Dairy Farms In Northern Europe: A Cross-Country analysis

“…Subsequently, the pace of structural change was also much higher in Estonia than in any of the other three countries, and a similar development was observed about labour productivity. The reasons of the fast structural transformation of the Estonian dairy sector are discussed further in Viira et al (2009). The rapid concentration of farms in Estonia has accompanied the catching up of labour productivity towards levels observed in the old member states, while the slow pace of structural change in the other three new entrants seems to explain the widening of the productivity gap separating them from the other countries of the Baltic Sea region…”