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Responsiveness of farm investment to price changes: evidence from the French crop sector

Author

Listed:
  • Fabienne Femenia

    (SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - INSTITUT AGRO Agrocampus Ouest - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement)

  • Laure Latruffe

    (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique, INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Jean-Paul Chavas

    (University of Wisconsin-Madison)

Abstract

In this article, we investigate the investment behaviour of French crop farmers between 2002 and 2014, with a focus on their adjustments to investment prices and farm output prices, which became more volatile after 2007. We estimate an econometric model of farm investment accounting for farm heterogeneity and allowing for change in behavioural parameters after 2007. Our results show evidence of a significant behavioural change in large investments over time, related to a change in farmers' preferences towards risk, which can explain the relative stability of farm investment over the period, despite the strong increase in crop price levels and in crop price volatility after 2007.

Suggested Citation

  • Fabienne Femenia & Laure Latruffe & Jean-Paul Chavas, 2021. "Responsiveness of farm investment to price changes: evidence from the French crop sector," Post-Print hal-03187933, HAL.
    • Handle: RePEc:hal:journl:hal-03187933
    DOI: 10.1080/00036846.2021.1890686
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    References listed on IDEAS

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    More about this item

    Keywords

    Investment; Risk; Risk aversion; Prices; Volatility; Crop farms;
    All these keywords.

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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