The Dynamics of Farm Incomes: Panel data analysis using the Farm Accounts Survey

Abstract

This paper uses longitudinal information from the Scottish Farm Accounts Survey to explore the dynamics of Scottish farm incomes between 1988/89 and 1999/2000. Both the Net Farm Income and Cash Income of farms are considered. The results show high levels of income variability and income mobility within Scottish agriculture. Although exit rates from the lowest income groups remain relatively high even when spells of low income have lasted a number of years, there is evidence of farms with persistent low farm income and farms experiencing repeated spells of low‐income. Smaller farm size and having a farmer aged over 65 increase both the probability that a farm will fall into the lowest income group and the length of time spent in that income group. Further the results suggest that the impact of the post‐1997 agricultural recession on income mobility depended on the income status of the farm when the recession began.

The Redistributive Effects of Agricultural Policy on Scottish Farm Incomes

“…The Gini coefficient for post‐support income of 0.939 implies that the average income disparity between farms was 1.878 times the size of average post‐support income, where the level of average income will have been depressed by the substantial minority of farms that recorded losses. Phimister et al. (2004) have previously reported an average Gini coefficient of 1.91 for Scottish agriculture over the three years 1997/1998 to 1999/2000, based on the narrower measure of net farm income.…”

Random within-herd variation in financial performance and time to financial steady-state following management changes in dairy herd

“…The empirical within-herd standard deviation of t248 found in the present study implies that much caution must be recommended when claming effect of changes in herd management because the link between management changes (cause) and effect (measured as improvement of gross margin per cow year) is extensively blurred by a large within-herd variation in available real life accounting data. This may explain the apparently unmotivated shifts in income group reported by Phimister et al (2004). It is necessary for both farmers and consultants to take this element of randomness into account when evaluating the financial performance related changes in management.…”

“…Consequently, it was likely that the resulting variance of the output from SimHerd underestimated the variance in real farming. Phimister et al (2004) reported results for within-herd variance from a longitudinal field study. In that study more than 40% of the herds experienced movements in relative income group (quintiles) in consecutive years and 20% moved more than 2 income groups in a year.…”

Returns from income strategies in rural Poland

“…The few examples include Goodwin and Holt (2002) for Bulgaria and Juvancic and Erjavec (2005) for Slovenia. 7 The specific demographic composition of the household (paying special attention to the number of young and elderly dependents) is crucial because of the differential income effects resulting from the household's joint budget constraint and costs imposed by different household members (Kimhi, 2004;Phimister et al, 2004). Much empirical evidence indicates that decisions about labour allocation depend highly on a household's human capital endowments (e.g.…”