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Causes of farm diversification over time: an Australian perspective on an Eastern Norway model

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  • Culas, Richard J.

Abstract

Farm planning often focuses on optimal diversification with respect to risk, where the risk-management strategies combine production, marketing, financial and environmental aspects of the farm-firm. In this study an empirical examination of diversification has been carried out using a sample of farms in Eastern Norway. Four measures of diversification (indices) were defined to record the risks in relation to income from farm production. Using these alternative measures of diversification and panel-data, the results show that larger farms are more diversified, and for farms in more favourable locations 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 and/or farm specialisation may not be environmentally desirable because of the pollution that would result. The Norwegian model offers good prospects for analysing similar issues of diversification in the Australian farming sector.

Suggested Citation

  • Culas, Richard J., 2006. "Causes of farm diversification over time: an Australian perspective on an Eastern Norway model," AFBM Journal, Australasian Farm Business Management Network, vol. 3(1), pages 1-9.
    • Handle: RePEc:ags:afbmau:122238
    DOI: 10.22004/ag.econ.122238
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    References listed on IDEAS

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    1. S. R. Johnson, 1967. "A Re-examination of the Farm Diversification Problem," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 49(3), pages 610-621.
    2. Ellis,Frank, 1993. "Peasant Economics," Cambridge Books, Cambridge University Press, number 9780521457118, October.
    3. Joyce T. Chen & C. B. Baker, 1974. "Marginal Risk Constraint Linear Program for Activity Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 56(3), pages 622-627.
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    Cited by:

    1. 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.
    2. Sichoongwe, Kiru, 2014. "Determinants and Extent of Crop Diversification Among Smallholder Farmers in Southern Zambia," Research Theses 243456, Collaborative Masters Program in Agricultural and Applied Economics.
    3. Abdul Razak Baba & Abdul-Malik Abdulai, 2021. "Determinants of Crop Diversification and Its Effects on Household Food Security in Northern Ghana," Arthaniti: Journal of Economic Theory and Practice, , vol. 20(2), pages 227-245, December.
    4. 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.
    5. Orlando Cimino & Marco Vassallo & Roberto Henke & Francesco Vanni, 2021. "Income Diversification Strategies of Italian Peri-Urban Farms: A Structural Equation Modeling Approach," Land, MDPI, vol. 10(8), pages 1-23, July.
    6. Bolier Torres & Cristian Vasco & Sven Günter & Thomas Knoke, 2018. "Determinants of Agricultural Diversification in a Hotspot Area: Evidence from Colonist and Indigenous Communities in the Sumaco Biosphere Reserve, Ecuadorian Amazon," Sustainability, MDPI, vol. 10(5), pages 1-21, May.
    7. 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.
    8. Jarmila Lazíková & Anna Bandlerová & Ľubica Rumanovská & Ivan Takáč & Zuzana Lazíková, 2019. "Crop Diversity and Common Agricultural Policy—The Case of Slovakia," Sustainability, MDPI, vol. 11(5), pages 1-14, March.
    9. Dube, Lighton & Numbwa, Revaux & Guveya, Euveya, 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 (AESS), vol. 6(1).
    10. repec:ags:cmpart:198521 is not listed on IDEAS
    11. Li, Lihua & Bellotti, Bill & Komarek, Adam M., 2016. "Structural change and agricultural diversification since China’s reforms," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 5(2), September.

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