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Modelling the effect of farming attitudes on farm credit use: a case study from Ireland

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  • Peter Howley
  • Emma Dillon

Abstract

Purpose - By examining the role of farming attitudes and motivations, the aim of this paper is to provide a framework for better understanding farmers' behaviour in relation to the decision to obtain credit. Design/methodology/approach - Using a nationally representative survey of farm operators in Ireland, this paper derives explanatory variables (based on a factor analysis of respondents mean ratings of 13 attitudinal statements) representing three different farming motivations. An ordered logit model is then formulated to examine the effect of farming attitudes as well as personal characteristics and farm structural variables on the degree of indebtedness. Findings - Personal characteristics of the farmer such as age and education as well as farm structural variables such as farm size and farm system were all found to strongly affect decisions in relation to credit use. The study identified how farmers are not just driven by business related goals such as maximising profits but are also strongly motivated by productivist tendencies and perceived lifestyle benefits associated with farm work. These underlying farming motivations were, in turn, found to have a differential impact on credit use. Specifically, business orientated attitudes were found to provide a prime incentive for farmers to borrow funds. On the other hand, farmers who strongly value the benefits associated with the farming lifestyle were less likely to look for credit. Originality/value - Past research has focused on the effect of socio‐demographic characteristics and farm structural variables in examining differences in farm indebtedness. This study extends this literature by specifically examining the role of farming attitudes. Obtaining a deeper understanding of the factors that affect the level of farming debt will be important as the degree of indebtedness has been found to affect farmers' management decisions. Outside of explaining farm credit use, farming attitudes and motivations may have an important impact on farmers' behaviour in relation to a variety of farm activities.

Suggested Citation

  • Peter Howley & Emma Dillon, 2012. "Modelling the effect of farming attitudes on farm credit use: a case study from Ireland," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 72(3), pages 456-470, November.
    • Handle: RePEc:eme:afrpps:v:72:y:2012:i:3:p:456-470
    DOI: 10.1108/00021461211277286
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    Citations

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    Cited by:

    1. Cathal O'Donoghue & Thia Hennessy, 2014. "Chapter 03: The Agri-Food Sector," Chapters from Rural Economic Development in Ireland, in: Rural Economic Development in Ireland, edition 1, chapter 3, Rural Economy and Development Programme,Teagasc.
    2. Schmitt, Thomas M. & Martín-López, Berta & Kaim, Andrea & Früh-Müller, Andrea & Koellner, Thomas, 2021. "Ecosystem services from (pre-)Alpine grasslands: Matches and mismatches between citizens’ perceived suitability and farmers’ management considerations," Ecosystem Services, Elsevier, vol. 49(C).
    3. Howley, Peter & Breen, James P. & Donoghue, Cathal O. & Hennessy, Thia, 2012. "Does the single farm payment affect farmers’ behaviour? A macro and micro analysis," International Journal of Agricultural Management, Institute of Agricultural Management, vol. 2(1), pages 1-8, October.
    4. Cathal O'Donoghue & Thia Hennessy, 2015. "Policy and Economic Change in the Agri-Food Sector in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 46(2), pages 315-337.
    5. Maria Marino & Benedetto Rocchi & Simone Severini, 2021. "Conditional Income Disparity between Farm and Non‐farm Households in the European Union: A Longitudinal Analysis," Journal of Agricultural Economics, Wiley Blackwell, vol. 72(2), pages 589-606, June.
    6. Peter Howley & Emma Dillon & Thia Hennessy, 2014. "It’s not all about the money: understanding farmers’ labor allocation choices," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 31(2), pages 261-271, June.
    7. Ifft, Jennifer E. & Kuhns, Ryan & Patrick, Kevin T., 2017. "Predicting Credit Demand with ARMS: A Machine Learning Approach," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258134, Agricultural and Applied Economics Association.
    8. Steele C. West & Amin W. Mugera & Ross S. Kingwell, 2021. "Drivers of farm business capital structure and its speed of adjustment: evidence from Western Australia’s Wheatbelt," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(2), pages 391-412, April.
    9. Spiegel, Alisa & Severini, Simone & Britz, Wolfgang & Coletta, Attilio, 2020. "Step-by-step development of a model simulating returns on farm from investments: the example of hazelnut plantation in Italy: The example of hazelnut plantation in Italy," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 9(1), April.

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