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Farm performance and investment decisions: evidence from the French (Brittany) dairy sector

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  • Loïc Levi
  • Laure Latruffe
  • Aude Ridier

Abstract

The objective of this paper is to investigate the role of farm performance in farmers’ investment decisions with a theoretical model accounting for adjustment costs and performance. The model is estimated on a balanced sample of specialised dairy farms in Brittany (western France) between 2005 and 2014. Two types of farms are considered: with high and with low capital intensity. The results show that spreading investment over time is, on average, an optimal strategy for maintaining performance in the presence of adjustment costs. In addition, the effect of performance on investment behaviour differs between the two farm types.

Suggested Citation

  • Loïc Levi & Laure Latruffe & Aude Ridier, 2019. "Farm performance and investment decisions: evidence from the French (Brittany) dairy sector," Working Papers SMART 19-01, INRAE UMR SMART.
    • Handle: RePEc:rae:wpaper:201901
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    File URL: https://ageconsearch.umn.edu/record/285033
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    Cited by:

    1. Perrin, Augustine & Cristobal, Magali San & Milestad, Rebecka & Martin, Guillaume, 2020. "Identification of resilience factors of organic dairy cattle farms," Agricultural Systems, Elsevier, vol. 183(C).
    2. Loic Levi & Obafemi Philippe Koutchade & Laure Latruffe & Aude Ridier, 2018. "Spatial effects in investment decisions: Evidence from French dairy farms," Post-Print hal-02024077, HAL.

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    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing

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