Description and Categorisation of Agriculture Holdings in the Region of Western Macedonia

The Region of Western Macedonia (RWM), Greece, is at a critical turning point in its history. The cessation of lignite use for energy purposes will drastically change its productive profile. Since agriculture is one of the main economic activities in the Region, apart from energy production, the sector is expected to play a significant role during and after the transition period, in the “post-lignite” era. The objective of this chapter is to investigate the structure of farm data in the RWM, explore the interrelationships between them and underline the correlations between the variables. The intent is to identify common factors that may explain the variation in farm data. The empirical analysis is based on a sample of 121 agricultural holdings of the Region from the Farm Accountancy Data Network (FADN) of the Greek Ministry of Rural Development & Food. A Principal Component Analysis (PCA) is applied in order to reduce the original large set of variables into a smaller set of uncorrelated components while still maintaining important information. Four factors were extracted with loadings that account for a significant variation of the total variance (87.90%), namely, net farm income, net farm value, farm size in terms of utilised land and labour employed, including family labour. The derived factors can be used to analyse the structure of the farming systems as well as farm operations in RWM and can be used to characterise systems and farms. This can be particularly important for policy purposes, as each component accounts for different aspects that should be considered when designing effective and applicable policies for the development of the farming sector and of rural areas of RWM in general.