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Causes of Diversification in Agriculture Over Time: Evidence From Norwegian Farming Sector

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  • Culas, Richard J.
  • Mahendrarajah, Mahen

Abstract

Farm planning generally focuses on optimal diversification with respect to risk and uncertainties, where the risk-management strategies combine production, marketing, financial and environmental responses of the production of farm firm. In this study an empirical examination of farm diversification has been carried out from a sample of farms in Eastern Norway in which four measures of diversification (indices) were defined to incorporate the risk and uncertainties in relation to farm production (total) income. Using these four alternative measures of diversification and panel-data techniques, it has been shown that larger farms are more diversified, and when there is productive location and access to labour the farmers have a greater incentive to spread risk. These results suggest that diversification and farm size are positively linked and that there may not be sufficient economies of scale to warrant specialisation. Alternatively, farm specialisation may not be environmentally desirable because of the soil and water pollution that have been caused by large scale farming systems usually practised in most of the developed countries like Norway. Hence, farm diversification can be used as a strategy for managing the pollution caused by large scale less diversified farming systems, as well as to spread the risk related to farm income.

Suggested Citation

  • Culas, Richard J. & Mahendrarajah, Mahen, 2005. "Causes of Diversification in Agriculture Over Time: Evidence From Norwegian Farming Sector," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24647, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaae05:24647
    DOI: 10.22004/ag.econ.24647
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    File URL: http://ageconsearch.umn.edu/record/24647/files/cp05cu01.pdf
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    Cited by:

    1. Bernard Kiprono, Rotich, 2012. "Contribution of On-Farm Diversification to Incomes of Smallholder Farmers in Konoin District, Bomet County," Research Theses 243441, Collaborative Masters Program in Agricultural and Applied Economics.
    2. Ciaian, P. & Guri, F. & Rajcaniova, M. & Drabik, D. & Gomez Y Paloma, S., 2018. "Does Land Fragmentation Increase Agricultural Production Diversification in Rural Albania?," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277093, International Association of Agricultural Economists.
    3. Mackenzie, Lesego & Mburu, John & Irungu, Patrick, 2017. "Analysis Of Household Choice And Determinants Of Livelihood Diversification Activities In Chobe District, Botswana," Dissertations and Theses 269268, University of Nairobi, Department of Agricultural Economics.
    4. Ciaian, Pavel & Guri, Fatmir & Rajcaniova, Miroslava & Drabik, Dusan & Paloma, Sergio, 2015. "Land Fragmentation, Production Diversification, and Food Security: A Case Study from Rural Albania," 2015 Conference, August 9-14, 2015, Milan, Italy 211539, International Association of Agricultural Economists.
    5. Lighton Dube & Revaux Numbwa & Emmanuel Guveya, 2016. "Determinants of crop diversification amongst agricultural co-operators in Dundwa agricultural camp, Choma district, Zambia," Asian Journal of Agriculture and rural Development, Asian Economic and Social Society, vol. 6(1), pages 1-13, January.
    6. Kurdyś-Kujawska, Agnieszka, 2016. "Significance Of Production Diversification In Ensuring Financial Security Of Farms In Poland," Journal of Agribusiness and Rural Development, University of Life Sciences, Poznan, Poland, vol. 2016(40).

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    Keywords

    Agribusiness;

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