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Investment and Financial Constraints in European Agriculture: Evidence from France, Hungary and Slovenia

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  • Ferto, Imre
  • Bakucs, Lajos Zoltan
  • Bojnec, Stefan
  • Latruffe, Laure

Abstract

The article investigates the investment and financial constraints for French, Hungarian and Slovenian farms using FADN panel data with different econometric estimation approaches. Farm gross investment is positively associated with real sales growth and cash flow implying the absence of soft budget constraint. Gross farm investment is positively associated with investment subsidies. Specific results by country are found depending on farm indebtedness. Investment subsidies can mitigate some capital market imperfections in short-term, while on long-term what is crucial is farm sale ability to successfully compete in the output market gaining sufficient cash flow for farm competitive survival and investment.

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File URL: http://purl.umn.edu/114357
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Bibliographic Info

Paper provided by European Association of Agricultural Economists in its series 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland with number 114357.

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Date of creation: 2011
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Handle: RePEc:ags:eaae11:114357

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Keywords: farm investment; soft budget constraint; investment subsidy; panel data analysis; Agricultural Finance; D81; D92; O12; Q12; C23;

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  1. Bojnec, Stefan & Latruffe, Laure, 2007. "Investment of Slovenian farms in the transition context," 104th Seminar, September 5-8, 2007, Budapest, Hungary 7827, European Association of Agricultural Economists.
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