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One or many European models of agriculture? How heterogeneity influences income creation among farms in the European Union

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  • Łukasz Kryszak

    (Department of Macroeconomics and Agricultural Economics, Institute of Economics, Poznań University of Economics and Business, Poznań, Poland)

  • Thomas Herzfeld

    (Department Agricultural Policy, Leibniz Institute of Agricultural Development in Transition Economies, Halle (Saale), Germany
    Institute of Agricultural and Food Sciences, Faculty of Natural Sciences III, Martin-Luther-University Halle-Wittenberg, Halle (Saale), Germany)

Abstract

Agricultural structures are quite heterogeneous across the European Union (EU), and it is likely that the underlying technology also differs across regions. In this article, we claim that the heterogeneity of agriculture across the EU affects the process of income creation (i.e. the relative importance of the factors of farm income differ for different agricultural models). A panel of farms representative for 125 regions reporting to the EU Farm Accountancy Data Network (FADN) during the period from 2007 to 2018 is used. In this article, those regions are grouped into three clusters. A system generalised method of moments (GMM) panel estimator is applied to each cluster. The results showed that total factor productivity (TFP), relative prices and agricultural subsidies make different contributions to farm net value added (FNVA). In particular, the income growth of farms in regions dominated by large farms seems to react more to marginal changes of the explanatory variables.

Suggested Citation

  • Łukasz Kryszak & Thomas Herzfeld, 2021. "One or many European models of agriculture? How heterogeneity influences income creation among farms in the European Union," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 67(11), pages 445-456.
    • Handle: RePEc:caa:jnlage:v:67:y:2021:i:11:id:154-2021-agricecon
    DOI: 10.17221/154/2021-AGRICECON
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