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Direct payments, spatial competition and farm survival in Norway

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  • Storm, Hugo
  • Mittenzwei, Klaus
  • Heckelei, Thomas

Abstract

We argue that interdependencies between farms are crucial for assessing effects of direct payments on farmers exit decisions. Using spatially explicit farm level data for nearly all Norwegian farms, a binary choice model with spatially lagged explanatory variables is estimated in order to explain farm survival from 1999 to 2009. We show that ignoring spatial interactions between farm leads to a substantial overestimation of the effects of direct payments on farm survival. To our knowledge, this paper is the first attempt to empirically analyze the role of neighbor interactions for farm structural change in general and for an assessment of the effects of direct payments on farm survival in particular.

Suggested Citation

  • Storm, Hugo & Mittenzwei, Klaus & Heckelei, Thomas, 2013. "Direct payments, spatial competition and farm survival in Norway," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150022, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea13:150022
    DOI: 10.22004/ag.econ.150022
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    Cited by:

    1. Dieter Pennerstorfer, 2022. "Farm exits and competition on the land market: Evidence from spatially explicit data," Economics working papers 2022-09, Department of Economics, Johannes Kepler University Linz, Austria.
    2. Stefan Mann, 2021. "Synthesizing Knowledge about Structural Change in Agriculture: The Integration of Disciplines and Aggregation Levels," Agriculture, MDPI, vol. 11(7), pages 1-14, June.
    3. Plogmann, Jana & Mußhoff, Oliver & Odening, Martin & Ritter, Matthias, 2022. "Farm growth and land concentration," Land Use Policy, Elsevier, vol. 115(C).
    4. Franziska Appel & Alfons Balmann, 2023. "Predator or prey? Effects of farm growth on neighbouring farms," Journal of Agricultural Economics, Wiley Blackwell, vol. 74(1), pages 214-236, February.
    5. Alexander Zorn & Franziska Zimmert, 2022. "Structural change in the dairy sector: exit from farming and farm type change," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 10(1), pages 1-31, December.
    6. Becca B. R. Jablonski & Nigel Key & Joleen Hadrich & Allie Bauman & Sarah Campbell & Dawn Thilmany & Martha Sullins, 2022. "Opportunities to support beginning farmers and ranchers in the 2023 Farm Bill," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(3), pages 1177-1194, September.
    7. Lim, Dong-Joon & Kim, Moon-Su, 2022. "Measuring dynamic efficiency with variable time lag effects," Omega, Elsevier, vol. 108(C).
    8. Sebastian Neuenfeldt & Alexander Gocht & Thomas Heckelei & Klaus Mittenzwei & Pavel Ciaian, 2021. "Using Aggregated Farm Location Information to Predict Regional Structural Change of Farm Specialisation, Size and Exit/Entry in Norway Agriculture," Agriculture, MDPI, vol. 11(7), pages 1-22, July.
    9. Vroege, Willemijn & Meraner, Manuela & Polman, Nico & Storm, Hugo & Heijman, Wim & Finger, Robert, 2020. "Beyond the single farm – A spatial econometric analysis of spill-overs in farm diversification in the Netherlands," Land Use Policy, Elsevier, vol. 99(C).
    10. Emmanuel Paroissien & Laure Latruffe & Laurent Piet, 2021. "Early exit from business, performance and neighbours’ influence: a study of farmers in France [Effects of differing farm policies on farm structure and dynamics]," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 48(5), pages 1132-1161.
    11. Ning Geng & Zengjin Liu & Xuejiao Wang & Lin Meng & Jiayan Pan, 2022. "Measurement of Green Total Factor Productivity and Its Spatial Convergence Test on the Pig-Breeding Industry in China," Sustainability, MDPI, vol. 14(21), pages 1-19, October.
    12. Taisuke Takayama & Tomoaki Nakatani & Tetsuji Senda & Takeshi Fujie, 2021. "Less‐favoured‐area payments, farmland abandonment and farm size: evidence from hilly and mountainous areas in Japan," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(3), pages 658-678, July.
    13. Forstner, Bernhard & Duden, Christoph & Ellßel, Raphaela & Gocht, Alexander & Hansen, Heiko & Neuenfeldt, Sebastian & Offermann, Frank & de Witte, Thomas, 2018. "Wirkungen von Direktzahlungen in der Landwirtschaft - ausgewählte Aspekte mit Bezug zum Strukturwandel," Thünen Working Papers 96, Johann Heinrich von Thünen Institute, Federal Research Institute for Rural Areas, Forestry and Fisheries.
    14. Chacattrai Rayasawath, 2018. "Factors Affecting the Household Succession in Agricultural Occupation in Nakhon Ratchasima Province, Thailand," Agriculture, MDPI, vol. 8(7), pages 1-14, July.
    15. Ioannis Skevas & Alfons Oude Lansink, 2020. "Dynamic Inefficiency and Spatial Spillovers in Dutch Dairy Farming," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(3), pages 742-759, September.
    16. Forstner, Bernhard & Duden, Christoph & Ellßel, Raphaela & Gocht, Alexander & Hansen, Heiko & Neuenfeldt, Sebastian & Offermann, Frank & de Witte, Thomas, 2018. "Wirkungen von Direktzahlungen in der Landwirtschaft – ausgewählte Aspekte mit Bezug zum Strukturwandel," Thünen Working Paper 272736, Johann Heinrich von Thünen-Institut (vTI), Federal Research Institute for Rural Areas, Forestry and Fisheries.
    17. Djanibekov, Utkur & Finger, Robert, 2018. "Agricultural risks and farm land consolidation process in transition countries: The case of cotton production in Uzbekistan," Agricultural Systems, Elsevier, vol. 164(C), pages 223-235.
    18. Neuenfeldt, Sebastian & Gocht, Alexander & Ciaian, Pavel & Heckelei, Thomas & Jongeneel, Roel, 2017. "Structural Change In European Agriculture," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 261141, European Association of Agricultural Economists.
    19. Mannaf, Maksuda & Wheeler, Sarah Ann & Zuo, Alec, 2023. "Global and Local Spatial Spill-Overs: What Matters Most for the Diffusion of Organic Agriculture in Australia?," Ecological Economics, Elsevier, vol. 209(C).
    20. Yanbing Wang & Niklas Möhring & Robert Finger, 2023. "When my neighbors matter: Spillover effects in the adoption of large‐scale pesticide‐free wheat production," Agricultural Economics, International Association of Agricultural Economists, vol. 54(2), pages 256-273, March.
    21. Marten Graubner, 2018. "Lost in space? The effect of direct payments on land rental prices," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 45(2), pages 143-171.
    22. Storm, Hugo & Heckelei, Thomas, 2016. "Local and regional spatial interactions of Norwegian farm growth," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235576, Agricultural and Applied Economics Association.
    23. Neuenfeldt, S. & Rieger, J. & Heckelei, T. & Gocht, A. & Ciaian, P. & Tetteh, G., 2018. "A multiplicative competitive interaction model to explain structural change along farm specialisation, size and exit/entry using Norwegian farm census data," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277090, International Association of Agricultural Economists.
    24. Kung, Chih-Chun & Zhang, Liguo & Kong, Fanbin, 2016. "How government subsidy leads to sustainable bioenergy development," Technological Forecasting and Social Change, Elsevier, vol. 112(C), pages 275-284.
    25. Storm, Hugo & Heckelei, Thomas, 2016. "Using Multiple Neighboring Interaction Effects In Spatial Regression Specifications To Reduce Omitted Variable Bias," 56th Annual Conference, Bonn, Germany, September 28-30, 2016 244763, German Association of Agricultural Economists (GEWISOLA).

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    More about this item

    Keywords

    Agricultural and Food Policy;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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