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Direct Payments, Spatial Competition, and Farm Survival in Norway

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  • Hugo Storm
  • Klaus Mittenzwei
  • Thomas Heckelei

Abstract

We argue that farm survival is influenced by neighboring farmers’ characteristics and, in particular, by the direct payments neighboring farmers receive. The article shows empirically that these interdependencies are crucial for an assessment of the effects of direct payments on farm survival. Using spatially explicit farm-level data for nearly all Norwegian farms, a spatial probit model is estimated to explain farm survival from 1999 to 2009 controlling for spatial farm interdependence. We show that ignoring spatial interdependencies between farms leads to a substantial overestimation of the effects of direct payments on farm survival. To our knowledge, this article is the first attempt to empirically analyze the importance of neighboring interdependencies for the effects of direct payments on farm survival.

Suggested Citation

  • Hugo Storm & Klaus Mittenzwei & Thomas Heckelei, 2015. "Direct Payments, Spatial Competition, and Farm Survival in Norway," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(4), pages 1192-1205.
    • Handle: RePEc:oup:ajagec:v:97:y:2015:i:4:p:1192-1205.
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    5. Storm, Hugo & Heckelei, Thomas, 2016. "Using Multiple Neighboring Interaction Effects In Spatial Regression Specifications To Reduce Omitted Variable Bias," 56th Annual Conference, Bonn, Germany, September 28-30, 2016 244763, German Association of Agricultural Economists (GEWISOLA).
    6. Plogmann, Jana & Mußhoff, Oliver & Odening, Martin & Ritter, Matthias, 2022. "Farm growth and land concentration," Land Use Policy, Elsevier, vol. 115(C).
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    8. Ioannis Skevas & Alfons Oude Lansink, 2020. "Dynamic Inefficiency and Spatial Spillovers in Dutch Dairy Farming," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(3), pages 742-759, September.
    9. Stefan Mann, 2021. "Synthesizing Knowledge about Structural Change in Agriculture: The Integration of Disciplines and Aggregation Levels," Agriculture, MDPI, vol. 11(7), pages 1-14, June.
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    11. Storm, Hugo & Heckelei, Thomas, 2016. "Local and regional spatial interactions of Norwegian farm growth," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235576, Agricultural and Applied Economics Association.
    12. Yanbing Wang & Niklas Möhring & Robert Finger, 2023. "When my neighbors matter: Spillover effects in the adoption of large‐scale pesticide‐free wheat production," Agricultural Economics, International Association of Agricultural Economists, vol. 54(2), pages 256-273, March.
    13. Forstner, Bernhard & Duden, Christoph & Ellßel, Raphaela & Gocht, Alexander & Hansen, Heiko & Neuenfeldt, Sebastian & Offermann, Frank & de Witte, Thomas, 2018. "Wirkungen von Direktzahlungen in der Landwirtschaft - ausgewählte Aspekte mit Bezug zum Strukturwandel," Thünen Working Papers 96, Johann Heinrich von Thünen Institute, Federal Research Institute for Rural Areas, Forestry and Fisheries.
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    16. Lim, Dong-Joon & Kim, Moon-Su, 2022. "Measuring dynamic efficiency with variable time lag effects," Omega, Elsevier, vol. 108(C).
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    18. Neuenfeldt, S. & Rieger, J. & Heckelei, T. & Gocht, A. & Ciaian, P. & Tetteh, G., 2018. "A multiplicative competitive interaction model to explain structural change along farm specialisation, size and exit/entry using Norwegian farm census data," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277090, International Association of Agricultural Economists.
    19. Kung, Chih-Chun & Zhang, Liguo & Kong, Fanbin, 2016. "How government subsidy leads to sustainable bioenergy development," Technological Forecasting and Social Change, Elsevier, vol. 112(C), pages 275-284.
    20. Taisuke Takayama & Tomoaki Nakatani & Tetsuji Senda & Takeshi Fujie, 2021. "Less‐favoured‐area payments, farmland abandonment and farm size: evidence from hilly and mountainous areas in Japan," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(3), pages 658-678, July.
    21. Djanibekov, Utkur & Finger, Robert, 2018. "Agricultural risks and farm land consolidation process in transition countries: The case of cotton production in Uzbekistan," Agricultural Systems, Elsevier, vol. 164(C), pages 223-235.
    22. Emmanuel Paroissien & Laure Latruffe & Laurent Piet, 2021. "Early exit from business, performance and neighbours’ influence: a study of farmers in France [Effects of differing farm policies on farm structure and dynamics]," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 48(5), pages 1132-1161.
    23. Forstner, Bernhard & Duden, Christoph & Ellßel, Raphaela & Gocht, Alexander & Hansen, Heiko & Neuenfeldt, Sebastian & Offermann, Frank & de Witte, Thomas, 2018. "Wirkungen von Direktzahlungen in der Landwirtschaft – ausgewählte Aspekte mit Bezug zum Strukturwandel," Thünen Working Paper 272736, Johann Heinrich von Thünen-Institut (vTI), Federal Research Institute for Rural Areas, Forestry and Fisheries.
    24. Becca B. R. Jablonski & Nigel Key & Joleen Hadrich & Allie Bauman & Sarah Campbell & Dawn Thilmany & Martha Sullins, 2022. "Opportunities to support beginning farmers and ranchers in the 2023 Farm Bill," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(3), pages 1177-1194, September.
    25. Neuenfeldt, Sebastian & Gocht, Alexander & Ciaian, Pavel & Heckelei, Thomas & Jongeneel, Roel, 2017. "Structural Change In European Agriculture," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 261141, European Association of Agricultural Economists.

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    More about this item

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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