Economic Prospects for Semi-Subsistence Farm Households in EU New Member States
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Economic prospect for semi-subsistence farm households in EU New Member States Authors: Jana Fritzsch, Stefan Wegener, Gertrud Buchenrieder, Jarmila Curtiss and Sergio Gomez y Paloma Editor: Alison Burrell 2010 EUR 24418 EN The mission of the JRC-IPTS is to provide customer-driven support to the EU policy-making process by developing science-based responses to policy challenges that have both a socio-economic as well as a scientific/technological dimension. European Commission Joint Research Centre Institute for Prospective Technological Studies Contact information Address: Edificio Expo. c/ Inca Garcilaso, 3. E-41092 Seville (Spain) E-mail: [email protected] Tel.: +34 954488318 Fax: +34 954488300 http://ipts.jrc.ec.europa.eu http://www.jrc.ec.europa.eu Legal Notice Neither the European Commission nor any person acting on behalf of the Commission is responsible for the use which might be made of this publication. 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It can be accessed through the Europa server http://europa.eu/ JRC58621 EUR 24418 EN ISSN 1018-5593 ISBN 978-92-79-16030-1 DOI 10.2791/43896 Luxembourg: Publications Office of the European Union © European Union, 2010 Reproduction is authorised provided the source is acknowledged Printed in Spain LEIBNIZ INSTITUTE OF AGRICULTURAL DEVELOPMENT IN CENTRAL AND EASTERN EUROPE Economic prospect for semi-subsistence farm households in EU New Member States Economic prospect for semi-subsistence farm households in EU New Member States Member New EU in farm households semi-subsistence for prospect Economic Authors: Jana Fritzsch, Stefan Wegener, Gertrud Buchenrieder, Jarmila Curtiss and Sergio Gomez y Paloma Editor: Alison Burrell Date: 12th May 2010 3 This report is the output of the Project “Sustainability of Semi-subsistence Farming Systems in New Member States and Acceding Countries (S-FARM)”, carried out by JRC-IPTS under Contract No. 150652- 2006 F1SC-DE. Project researchers in alphabetical order Ioana M. Balan (1) Gertrud Buchenrieder (2) Graham Dalton (private expert, United Kingdom) Jana Fritzsch (2) Christina Harizanova (3) Anna Kłoczko-Gajewska (4) Edward Majewski (4) Plamen Mishev (3) Cosmin Salasan (1) Nikolay Sterev (3) Zornitza Stoyanova (3) Piotr Sulewski (4) Stefan Wegener (2) Axel Wolz (2) (1) Banat’s University of Agricultural Sciences and Veterinary Medicine Timisoara (USAMVB) (2) Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO), Halle (Saale), Germany (3) University of National and World Economy (UNWE), Sofia, Bulgaria (4) Warsaw Agricultural University (WAW), Warsaw, Poland Co-ordinators from IPTS in alphabetical order Jarmila Curtiss Sergio Gomez y Paloma Acknowledgment The authors gratefully acknowledge valuable comments and suggestions on earlier versions of this report from Erik Mathijs, Philip Kostov, Alison Burrell, and Pavel Ciaian. The results were intensively discussed on two meetings with officers from the European Commission in Brussels. Comments and suggestions given in these meetings promoted the work to the right direction. We would also like to thank Zentraler Sprachenservice J. Suchowij, David Chichester-Bredin, Benjamin Haymond, and Alison Burrell for thorough language editing, and Monika Schmidt for the editing of the final version of the report. 4 Table of Contents List of Tables 8 List of Figures 10 List of Equations 11 Abbreviations and Acronyms 12 Executive Summary 15 1 Introduction 23 1.1 The Challenges for Semi-subsistence Farm Households 23 1.2 The Issue of Policy Response and Semi-subsistence Farm Households 24 1.3 Objectives and Research Questions of the S-FARM Study 26 1.4 Structure of the S-FARM Study and the Report 26 Part 1: Semi-subsistence Farm Households: Literature Review and Application to Transition Countries 29 2. Semi-subsistence Farm Households: A Literature Review 29 2.1 Identification and Definition of SFHs 29 2.2 Theoretical Attempts at Explaining SFHs’ Behaviour 31 States Member New EU in farm households semi-subsistence for prospect Economic 2.3 Determinants, Characteristics and Prospects of Semi-Subsistence in CEE 33 3. Country Case Studies on Semi-subsistence Farm Households 37 3.1 Farm Structure and Semi-subsistence Farm Households in Poland 37 3.1.1 Farm Structure 37 3.1.2 Semi-subsistence Farm Households 37 3.2 Farm Structure and Semi-subsistence Farm Households in Romania 40 3.2.1 Farm Structure 40 3.2.2 Semi-subsistence Farm Households 41 3.3 Farm Structure and Semi-subsistence Farm Households in Bulgaria 42 3.3.1 Farm Structure 42 3.3.2 Semi-subsistence Farm Households 44 3.4 Selected Policy Measures for SFHs in Poland, Romania, and Bulgaria 48 5 3.4.1 Transitional semi-subsistence measure (TSS) 49 3.4.2 Farm investment support for the modernisation of agricultural holdings 50 3.4.3 Support for diversification into non-agricultural activities 51 3.4.4 Early retirement support 52 Part 2: The Survey Instrument of S-FARM 55 4. Methodology for Implementing the Survey Instrument 55 4.1 Structure of the Questionnaire 55 4.2 Selection of Survey Regions 56 Table of Contents of Table 4.2.1 Poland 56 4.2.2 Romania 58 4.2.3 Bulgaria 59 4.3 Selection of Villages 61 4.3.1 Poland 61 4.3.2 Romania 62 4.3.3 Bulgaria 63 4.4 Selection of Households 63 4.5 Quality Control Aspects 65 Part 3: Typology of SFHs – Country Specific Characteristics and Viability 67 5 Deriving and Interpreting a Typology for SFHs 67 5.1 Methodology for Deriving a Typology for SFHs 67 5.2 Identified SFH types 69 5.3 Socio-economic Characteristics of SFH types 70 5.3.1 Rural Non-farm Oriented Households (Rural Diversifiers, N=150) 71 5.3.2 Rural Pensioners and Deprived Households (Rural Pensioners, N=83) 74 5.3.3 Large-scale Semi-subsistence Farm Households (Farmers, N=153) 76 5.3.4 Rural Households with Undeveloped Potential (Rural Newcomers, N=103) 80 5.4 Critical Assessment of the Viability of SFHs 83 6 Country Specific Behaviour and Viability within SFH types 87 6.1 Household Behavioural Characteristics 87 6.1.1 Rural Diversifiers 88 6.1.2 Rural Pensioners 90 6.1.3 Farmers 91 6.1.4 Rural Newcomers 93 6.2 Viability 94 6.2.1 Rural Diversifiers 95 6.2.2 Rural Pensioners 95 6.2.3 Farmers 96 6.2.4 Rural Newcomers 97 6 6.3 Summary 98 Part 4: Description of the Policy Simulation Model and Results of the Decision Scenarios for Representative SFHs 99 7 Modelling Policy Measures for SFHs Using Linear Programming 99 7.1 Brief Overview of the Linear Programming Methodology 99 7.2 Selection of Representative SFHs for the Model 102 7.3 Structure of the S-FARM Model 103 7.4 Parametric Specification of the Household Models 104 7.5 Simulation Assumptions 106 7.5.1 Scenarios for Simulation 106 7.5.2 Simulation Parameters for Countries and Scenarios 107 7.5.3 Household-specific Simulation Parameters 111 Appendix 7.1: Equations of the programming model 113 Appendix 7.2: Further details of household-specific parameters by SFH type 117 8 Simulation Results 121 8.1 Development of Simulated Household Cash Balances 121 8.1.1 Development of Simulated Household Cash Balances in the Baseline Scenario 121 8.1.2 Development of Simulated Household Cash Balances in the Decision Scenarios 122 8.1.3 Rankings of the Simulated Household Cash Balances 124 8.2 Comparison of the Simulated Strategies for Each SFH Type 126 8.2.1 Comparison of Strategies for Rural Diversifiers 126 8.2.2 Comparison of Strategies for Rural Pensioners 127 Economic prospect for semi-subsistence farm households in EU New Member States Member New EU in farm households semi-subsistence for prospect Economic 8.2.3 Comparison of Strategies for Farmers 127 8.2.4 Comparison of Strategies for Rural Newcomers 127 8.3 Impact of the Transitional Semi-subsistence Support Measure 128 8.4 Results of Sensitivity Analysis 130 8.5 Summary of Simulation Results 131 9 Summary, Important Findings, Conclusion and Policy Recommendations 133 9.1 Summary of S-FARM Objectives and Methodologies 133 9.2 Important Findings 135 9.3 Conclusion and Policy Recommendations 138 10 References 143 7 List of Tables Table 1: Diversification among small-scale farms 25 Table 2: Poland: Number of farms, employment rate, total area, and structure of land owned by different types of farms according to farm size in 2002 39 Table of Contents of Table Table 3: Poland: Characteristics of farm household heads by farm type and size, 2002 39 Table 4: Poland: Economic results achieved by farm type and size, 2004 40 Table 5: Poland: Regional shares of farms without market production, 1996 and 2000 40 Table 6: Romania: Number, cultivated area and farm size by farm size groups, 2002 41 Table 7: Romania: Share of farm types and utilised agricultural area in 2002 42 Table 8: Bulgaria: Size distribution of individual farms in 1993 43 Table 9: Bulgaria: Size distribution of individual farms (natural persons) in 2005 44 Table 10: Bulgaria: Distribution of farms by the share of own consumption, 2004/2005 45 Table 11: Bulgaria: Regional shares (%) of all farms, commercial farms and UAA1, 2005 47 Table 12: Bulgaria: Regional shares of farms by own-consumption share, 2004/2005 47 Table 13: Bulgaria: Regional shares (%) of all farms, commercial farms and farmers older than 65 years, 2005 48 Table 14: Eligibility criteria of SFHs in