The investment behaviour of dairy farms in transition economies

Fertő, Imre; Bojnec, Štefan; Fogarasi, József; Viira, Ants‐Hannes

doi:10.1080/1406099x.2021.1920754

Cited by 7 publications

(10 citation statements)

References 60 publications

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“…Similar to Fertő et al. (2020, 2021), we found that increase in debt to capital ratio decreases farm investments. While in agriculture, owned land is the main collateral for bank loans, the results suggest that farms with higher proportion of owned land invest less.…”

Section: Discussionsupporting

confidence: 81%

“…As in case of previous studies (Bakucs et al ., 2009; Bojnec and Latruffe, 2011; Aleksandrova, 2020; Fertő et al ., 2020, 2021), investment subsidies had a positive and significant effect on farm investments. This is in accordance with our expectations and the rationale of such a policy instrument.…”

Section: Discussionmentioning

confidence: 96%

“…(2020) provided insights into investment and financial constraints in farms using individual FADN panel data from Estonia, Hungary and Slovenia in the period 2007–2015, and confirmed the presence of strong SBCs for Estonian farms. Similarly, Fertő et al. (2021) found significant SBCs for financially unconstrained Estonian dairy farms.…”

Section: Related Literaturementioning

confidence: 86%

“…Previous studies on SBC in Estonian agriculture have confirmed the presence of SBC for all Estonian farms (Fertő et al ., 2020) and financially unconstrained Estonian dairy farms (Fertő et al ., 2021). Our results showed that in case of standard augmented accelerator investment model, the SBC were not present.…”

Section: Discussionmentioning

confidence: 99%

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Investments, subsidies and financial constraints in Estonian agriculture

Aleksandrova,

Fertő,

Viira

2023

AFR

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PurposeThe purpose of this study is to explore the determinants of investment decisions of Estonian farms after the transition to market economy and accession to the European Union (EU), in the period 2006–2019.Design/methodology/approachThe paper employs Estonian Farm Accountancy Data Network (FADN) individual farm-level data from the period 2006–2019, and standard and augmented accelerator investment models. Generalised methods of moments (GMM) and bias-corrected least-squares dummy variables (LSDVC) regressions were used to estimate parameters of these models.FindingsIn the considered period, farm investments were positively affected by sales growth, investment subsidies and the cash flow. Decomposition of cash flow into volatile, market income related part, and more stable, farm subsidies related part indicated that investments do not depend on market income part of cash flow. Instead, the stable part of the cash flow (farm subsidies) had a significant and positive effect on investments. This suggests that credit rationing could be present in the EU agriculture, and it depends on the farm subsidies not market income of farms.Originality/valueDespite the wealth of literature on the investment behaviour of farmers, this article is the first attempt to decompose farm cash flow into stable (farm subsidies) and volatile (market income) parts to explain the role of subsidies as a part of cash flow in credit rationing.

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Section: Discussionsupporting

confidence: 81%

Section: Discussionmentioning

confidence: 96%

Section: Related Literaturementioning

confidence: 86%

Section: Discussionmentioning

confidence: 99%

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Investments, subsidies and financial constraints in Estonian agriculture

Aleksandrova,

Fertő,

Viira

2023

AFR

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“…AGBENYO et al, (2019), in their contribution to the access to finance debate, established that understanding finance's function in the endogenous growth theory portrays that the agriculture sector's growth is dependent on access to financing. Access to financial services is also an essential to rural development, according to ABRAHAM &FONTA (2018) andFERTŐ et al, (2021). It will also increase incomes through productive investment, assist in the creation of employment opportunities, facilitate investments in health and education, and reduce the poor's vulnerability by assisting them in smoothing their income patterns over time (ASANTE-ADDO et al, 2017;BECK;DEMIRGUC-KUNT;HONOHAN, 2009;ISAGA, 2018).…”

Section: Introductionmentioning

confidence: 99%

Empirical impact of financial service access on farmers income in Ghana

et al. 2023

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The impact of access to financial services (AFS) and access to informal financial services (AIFS) on farmer income is examined in this study. After a multi-stage random sampling procedure, the study used a sample size of 478 people from two regions in Ghana. The endogenous treatment regression (ETR) model was used to account for selection bias while the unconditional quantile regression (UQR) model was used for a heterogenous analysis. The findings showed that education, financial literacy, IT access, farm size, and distance were all factors of access to financial services. Similarly, the findings revealed a positive and statistically significant link between household income and access to formal financial services. Similarly, there was a positive and significant association between access to informal financial services and household income. The findings showed that access to formal and informal financial services has different effects on household income. As a result, the effects of access to financial services on income varied by quantile. Based on the findings of the study, we developed policies to boost financial services accessibility as a means of increasing household income.

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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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The investment behaviour of dairy farms in transition economies

Cited by 7 publications

References 60 publications

Investments, subsidies and financial constraints in Estonian agriculture

Investments, subsidies and financial constraints in Estonian agriculture

Empirical impact of financial service access on farmers income in Ghana

Financial constraints and nonlinearity of farm size growth

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