Rural livelihoods in the EU new member states: subsistence production versus market integration

Commercialisation of small farmers, of which many are subsistence farmers producing mainly for own consumption needs, is an important policy objective for the restructuring process of the farm structure in the EU New Member States (NMS). Drawing on primary survey data from five EU NMS, this paper first assesses the importance of subsistence farming in the NMS through the valuation of subsistence production at market prices. Secondly, the paper analyses the differences between subsistence and commercial households. Where previous studies normally classify households as subsistence or commercial based on a pre-defined threshold, the use of latent class regression in this paper represents a way to systematically analyse heterogeneous groups of households in a more objective way, as determinant of class membership (subsistence or commercial) is not pre-defined. The latent class regression provides evidence of two classes – one subsistence and one commercially oriented – who differ in behaviour with respect to a set of explanatory variables accounting for attitudes, production and household characteristics.