Semi-Subsistence Farming, Farm Income and Social Capital in Bulgaria – Is there a Link?

Social capital matters in determining a person’s or a family’s material well-being. It is argued that social capital functions similar to the traditional production factors. However, there are not many empirical analyses looking into this hypothesis at the farm-household level in general and in post-communist countries in particular. Whether or not social capital affects farm income is tested in this paper in two ways using micro-data from 185 Bulgarian semi-subsistence farm households (SFHs). First, it is tested whether social capital has an impact on agricultural income. Whether social capital promotes more efficient farming is evaluated in a second step. The findings confirm the hypothesis that social capital not only increases agricultural income, but also the efficiency of agricultural production among SFHs in Bulgaria. However, different specifications of social capital may impact income and efficiency in a diverse way. While good relations to corporate farms are significant in getting higher agricultural incomes, good relations to large-scale private farmers significantly impact efficient managerial capability of SFHs. It is suggested that good links to the second group are vital for those SFHs, which aim at becoming viable farmers in the future.