Modelling Investment Decisions on Dairy Farms

Farmers’ investment decisions can shape their capacity to implement practices consistent with sustainable development objectives. The article identifies the declarative structure of investment decisions on Polish dairy farms based on a survey and diverse theoretical frameworks (resource-based view, institutional approach, real options theory, behavioural theory, and the theory of planned behaviour). The purpose is to identify the determinants of the extent and structure of declared agricultural investments. The authors determined the relationships between declared investments and groups of variables and identified investment axes and interdependencies. Investment decision predictions are founded on logistic regression, an SEM model for relationship structuring, and residual correlation analysis for mapping relationships and evaluating the correlation demasking effect, according to which raw correlations between investment axes may hide underlying residual associations between them. We found that declared farmland investments were associated with milk production volume and appeared to be linked to long-term farm development objectives. The respondents became less keen on investing in livestock production as they aged, whereas older farmers showed a greater propensity to undertake energy-related investments. These results suggest that farmers’ declared investment intentions may be consistent with conditions conducive to achieving sustainable development objectives through their potential association with farm viability, resource-use efficiency, and rural economic development. Our findings may have potential policy relevance by informing the design of public measures aimed at strengthening farms’ adaptive capacity in the context of sustainability transitions.