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The Effect of Non-Farm Income on Investment in Bulgarian Family Farming

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  • Tom Hertz

Abstract

This paper documents a relationship between non-farm income (primarily earnings and pensions) and agricultural outlays in Bulgaria, using the 2003 Multitopic Household Survey. The outcomes analyzed are expenditures on working capital (variable inputs such as feed, seed, and herbicides) and investment in livestock. I find that while non-farm income has no significant effect on the probability of purchasing variable inputs, it does have an effect on the amount spent if positive, with an estimated elasticity of 0.14. Non-farm income also has an effect on the number of households that purchase farm animals, with an estimated elasticity of 0.35. The use of non-farm income for farm investment is consistent with the presence of credit constraints, as is the fact that less than one per cent of farmers report outstanding debts for agricultural purposes. Yet it is also noted that many farm households take out large unsecured loans for other purposes, suggesting that a lack of demand for agricultural borrowing may also be part of the problem.

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  • Tom Hertz, 2007. "The Effect of Non-Farm Income on Investment in Bulgarian Family Farming," Working Papers 2007-15, American University, Department of Economics.
    • Handle: RePEc:amu:wpaper:1507
    DOI: 10.17606/m8bp-de82
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    2. Tom Hertz, 2010. "Heteroskedasticity-robust elasticities in logarithmic and two-part models," Applied Economics Letters, Taylor & Francis Journals, vol. 17(3), pages 225-228, February.
    3. Bojnec, Stefan & Ferto, Imre, 2011. "Impact of Off-farm Income on Farm Efficiency in Slovenia," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114258, European Association of Agricultural Economists.
    4. Benjamin Davis & Paul Winters & Thomas Reardon & Kostas Stamoulis, 2009. "Rural nonfarm employment and farming: household‐level linkages," Agricultural Economics, International Association of Agricultural Economists, vol. 40(2), pages 119-123, March.
    5. Fertö, Imre, 2014. "The Structural Transformation in Central and Eastern European Agriculture," CEI Working Paper Series 2014-9, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    6. Mst Tania Parvin & Kanij Fatema & Sadika Haque, 2021. "Factors Determining the Credit Accessibility by the Small-Scale Entrepreneurs: A Case of Handloom Weaving in Bangladesh," International Journal of Business and Management, Canadian Center of Science and Education, vol. 15(8), pages 1-93, July.
    7. Mann, Stefan & Latruffe, Laure & Hediger, Werner, 2010. "On labour productivity to deliver private and public goods –the influence of off-farm income," Working Papers 210385, Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2).
    8. Mieke Meurs, 2013. "What Makes a Farmer? The Limited Expansion of Commercial Farming Among Bulgarian Smallholders," Working Papers 2013-08, American University, Department of Economics.
    9. Laura Barasa & Bethuel K. Kinuthia & Abdelkrim Araar & Stephene Maende & Faith Mariera, 2023. "Nonfarm entrepreneurship, crop output, and household welfare in Tanzania: An exploration of transmission channels," Agribusiness, John Wiley & Sons, Ltd., vol. 39(3), pages 762-792, July.
    10. Mishra, K., 2018. "You are Approved! Insured Loans Improve Credit Access and Technology Adoption of Ghanaian Farmers," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277089, International Association of Agricultural Economists.
    11. Talip Kilic & Calogero Carletto & Juna Miluka & Sara Savastano, 2009. "Rural nonfarm income and its impact on agriculture: evidence from Albania," Agricultural Economics, International Association of Agricultural Economists, vol. 40(2), pages 139-160, March.
    12. Jutao Zeng & Jie Lyu, 2023. "Simultaneous Decisions to Undertake Off-Farm Work and Straw Return: The Role of Cognitive Ability," Land, MDPI, vol. 12(8), pages 1-21, August.
    13. Bose-Duker,Theophiline & Gaddis,Isis & Kilic,Talip & Lechene,Valérie & Pendakur,Krishna, 2021. "Diamonds in the Rough? : Repurposing Multi-Topic Surveys to Estimate Individual-Level Consumption Poverty," Policy Research Working Paper Series 9661, The World Bank.
    14. Bhaskar Jyoti Neog & Bimal Kishore Sahoo, 2020. "Rural non‐farm diversification, agricultural feminisation and women's autonomy in the farm: evidence from India," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(3), pages 940-959, July.
    15. Jehovaness Aikaeli & Martin Julius Chegere & John Rand, 2023. "Complementarity and substitutability between farm and nonfarm activities: Evidence from agricultural households in Tanzania," Review of Development Economics, Wiley Blackwell, vol. 27(1), pages 89-111, February.
    16. Augustyńska-Grzymek, Irena & Skarzyska, Aldona & Abramczuk, Łukasz, 2013. "The pluriactive development of agricultural holdings in Poland with regard to the living standards of their users," Studies in Agricultural Economics, Research Institute for Agricultural Economics, vol. 115(1), pages 1-9, February.
    17. Ma, Wanglin & Zhou, Xiaoshi & Renwick, Alan, 2019. "Impact of off-farm income on household energy expenditures in China: Implications for rural energy transition," Energy Policy, Elsevier, vol. 127(C), pages 248-258.
    18. Hohfeld, Lena & Waibel, Hermann, 2013. "Investments of Rural Households in Northeast Thailand and the Future of Small Scale Farming," Quarterly Journal of International Agriculture, Humboldt-Universitaat zu Berlin, vol. 52(3), pages 1-20, August.
    19. Tuan Nguyen-Anh & Nguyen To-The & Song Nguyen-Van, 2021. "Economic impacts of political ties in Vietnam: evidence from Northern rural households," Asia-Pacific Journal of Regional Science, Springer, vol. 5(3), pages 993-1021, October.
    20. Van Herck, Kristine, 2011. "Where have all the farmers gone? EU Accession and Structural Change in Bulgaria," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114829, European Association of Agricultural Economists.

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