Explaining farm succession: the impact of farm location and off-farm employment opportunities

Abstract

This paper studies the impact of farm location on family farm succession, using a sample of farm households located at different distances from the urban centre in a rural region of Spain. Aggregated household data and household/child cross section data are used to analyze farm succession from two different perspectives, the father's and that of each of the children. The research considers both the father's expectations for the transfer of the farm to the next generation and, also, the impact of the individual characteristics of each child on the likelihood of his/her entering agriculture. Two estimates, the probit and random parameter ordered probit model, suggest that farm location has a significant effect on the probability of one of the farm operator's children taking on the business. Other important factors that affect farm succession are firm size and farm children's level of education. Then, policy initiatives to foster qualified employment and structural change in agriculture may perhaps help to retain young people in farming.