Determinants of farm diversification: entrepreneurship, marketing capability and family management

Abstract

Farm diversification has been widely regarded as a panacea for improving the rural economy within the Common Agricultural Policy (CAP). However, the CAP provides less support for the entrepreneurial behavior that farmers need to exhibit to make diversification successful. Previous studies have identified the capabilities and preferences of farmers as determinants of diversification. Although, the complex relationship between these factors and diversification decisions is not well understood. Using data from a survey of 182 farms located close to urban areas in the UK, this paper reports on one of the first studies to quantitatively explore farm diversification through identifying the impact of the entrepreneurial behavior of farmers and the role of family businesses. Using structural equation models, the results suggest that farmers’ marketing capabilities mediate the positive influence that entrepreneurial ability has on diversification. Moreover, while preferences for maintaining the farm as a family business have a negative effect on entrepreneurship and diversification, a desire for the family business to make a social contribution has a more positive impact. These findings have significant implications for EU rural development policies and for the future development of rural policies in the UK in light of its impending departure from the EU.

ABSTRAIT

La diversification de la production agricole est largement considérée comme une panacée pour l’amélioration de l’économie rurale dans le cadre de la politique agricole commune (PAC). Cependant, la PAC n’offre pas aux agriculteurs tout le soutien dont ils ont besoin, en termes de comportements entrepreneuriaux à adopter pour garantir le succès de la diversification. Des études précédentes ont identifié les capacités et les préférences des agriculteurs en tant que déterminants de la diversification. Malgré cela, le rapport complexe entre ces facteurs et les décisions en matière de diversification n’est pas bien compris. À partir des données d’une enquête ayant porté sur 182 entreprises agricoles situées à proximité de centres urbains du Royaume-Uni, cet article rend compte de l’une des premières études à avoir exploré la diversification agricole quantitativement, à travers une identification de l’impact des comportements entrepreneuriaux des agriculteurs et du rôle des entreprises familiales. Obtenus grâce à l’utilisation de modèles d’équation structurelle, les résultats laissent entendre que les capacités de commercialisation des agriculteurs tempèrent l’influence positive de l’aptitude entrepreneuriale sur la diversification. En outre, si la préférence pour le maintien du statut d’entreprise familiale des entreprises agricoles a un effet négatif sur l’entrepreneuriat et la diversification, le désir de contribution sociale des entreprises familiales a un impact plus positif. Ces résultats ont des implications significatives pour les politiques de développement rural dans l’UE et pour l’élaboration future des politiques rurales au Royaume-Uni, à la lumière du départ imminent de ce dernier de l’Union européenne.

Keywords:

• entrepreneurship
• farm diversification
• family businesses
• operational capabilities
• structural equation modeling
• close-to-urban farms

Mots-clÉs:

• entrepreneurship
• diversification agricole
• entreprises familiales
• entreprises agricoles situées à proximité des centres urbains

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the Japan Society for the Promotion of Science (Grant number 16J06712). In accordance with Taylor & Francis policy and our ethical obligations as researchers, we report that we have no financial and business interests in any company that may be affected by the research reported in this paper.

Notes on contributors

Shingo Yoshida is a researcher at Policy Research Institute, Ministry of Agriculture, Forestry and Fisheries. He got his Ph.D. in agriculture from the University of Tokyo. He was a visiting researcher of Centre for Rural Economy at Newcastle University. His research interest lies in the area of farm business management, ranging from strategic management to entrepreneurship of farmers.

Hironori Yagi is an associate professor of farm business management at the Department of Agricultural and Resource Economics at the University of Tokyo. His research interests lie in the areas of regional agricultural management, strategic management and land-use planning.

Guy Garrod is a reader in environmental economics and Director of the Centre for Rural Economy at Newcastle University. His research interests range from environmental valuation to rural policy and agri-environment measures.