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Responsiveness of farm investment to price changes: An empirical study of the French crop sector

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  • Femenia, Fabienne
  • Latruffe, Laure
  • Chavas, Jean-Paul

Abstract

Understanding how farmers respond to prices can shed light into investment behavior and inform policy makers. We investigate the investment behavior of French crop farmers between 2002 and 2014, with a focus on adjustments to market prices. The analysis relies on a structural investment model derived from the maximization of farmers’ future expected profit. Our estimation results show evidence of significant changes in investment behavior over time, farmers’ investment being more responsive to output price before 2006, and to investment price from 2007. This suggests that government intervention through investment price may have positive impacts during periods of price volatility.

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  • Femenia, Fabienne & Latruffe, Laure & Chavas, Jean-Paul, 2017. "Responsiveness of farm investment to price changes: An empirical study of the French crop sector," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 261421, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae17:261421
    DOI: 10.22004/ag.econ.261421
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    Cited by:

    1. 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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    Keywords

    Farm Management; Productivity Analysis;

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