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Responsiveness of farm investment to price changes: Evidence from the French crop sector

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

Abstract

In this article we investigate the investment behaviour of French crop farmers between 2002 and 2014, with a focus on their adjustments to investment prices and farm output prices, which became more volatile after 2007. We estimate an econometric model of farm investment accounting for farm heterogeneity and allowing for change in behavioural parameters after 2007. Our results show evidence of a significant behavioural change in large investments over time, related to a change in farmers’ preferences toward risk, which can explain the relative stability of farm investment over the period, despite the strong increase in crop price levels and in crop price volatility after 2007.

Suggested Citation

  • Femenia, Fabienne & Latruffe, Laure & Chavas, Jean-Paul, 2021. "Responsiveness of farm investment to price changes: Evidence from the French crop sector," Working Papers 309736, Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2).
    • Handle: RePEc:ags:inrasl:309736
    DOI: 10.22004/ag.econ.309736
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    More about this item

    Keywords

    Crop Production/Industries; Farm Management; Research Methods/ Statistical Methods; Risk and Uncertainty;
    All these keywords.

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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