The Determinants of Farm Income Variability: Evidence From Estonia

Agricultural Subsidies; Agriculture; Estonia; Farm Income Instability; Within Instrumental Variables Estimator; Agricultural and Biological Sciences (miscellaneous); Economics and Econometrics

Abstract :

[en] Farm income is a policy-relevant proxy for farm households' viability. Volatile income levels reduce the well-being of farmers and decrease their incentives to produce, invest, and innovate. This article provides a comprehensive analysis of the associations between agricultural subsidies, farm characteristics, and the stability of farm income, along with their relative importance, by applying a linear fixed-effects model to the Estonian Farm Accountancy Data Network (FADN) sample. Building on previous analyses, we show that a significant portion of agricultural subsidies in gross farm income is positively associated with income instability. Our estimates suggest that financial immobility is positively correlated with income stability. This indicates that farm-specific grants can provide opportunities to invest while also alleviating budget constraints for indebted farms. After controlling for various farm characteristics, we find that income becomes more stable as farmers age, while income volatility associated with agricultural production is positively linked to rising land prices.

Disciplines :

Agriculture & agronomy

Author, co-author :

Aleksandrova, Olha ; Estonian University of Life Sciences, Tartu, Estonia

Azadi, Hossein ; Université de Liège - ULiège > TERRA Research Centre > Modélisation et développement

Värnik, Rando ; Estonian University of Life Sciences, Tartu, Estonia

Nurmet, Maire ; University of Tartu, Tartu, Estonia

Viira, Ants-Hannes ; Estonian University of Life Sciences, Tartu, Estonia ; The Centre of Estonian Rural Research and Knowledge, Tartu, Estonia

Language :

English

Title :

The Determinants of Farm Income Variability: Evidence From Estonia

Publication date :

19 August 2024

Journal title :

Agrarwirtschaft

ISSN :

0002-1121

eISSN :

2191-4028

Publisher :

TIB Open Publishing (Technische Informationsbibliothek (TIB))

Volume :

Issue :

Peer reviewed :

Peer Reviewed verified by ORBi

Additional URL :

https://www.tib-op.org/ojs/index.php/gjae/article/download/2549/2401

Funding text :

The authors are grateful for providing FADN data to Mrs. Marju Aamisepp from the Centre of Estonian Rural Research and Knowledge. The authors acknowledge the helpful and constructive comments of editor, Prof. Dr. Silke H\u00FCttel and two anonymous reviewers. Final editing of the paper was supported by the Centre of Excellence for Sustainable Land Use \u201EFutureScapes\u201C (Project No. TK232 U8).

Available on ORBi :

since 25 February 2025

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