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Farm performance and investment decisions: evidence from the French (Brittany) dairy sector

Loïc Levi, Laure Latruffe and Aude Ridier

No 19-01, Working Papers SMART from INRAE UMR SMART

Abstract: The objective of this paper is to investigate the role of farm performance in farmers’ investment decisions with a theoretical model accounting for adjustment costs and performance. The model is estimated on a balanced sample of specialised dairy farms in Brittany (western France) between 2005 and 2014. Two types of farms are considered: with high and with low capital intensity. The results show that spreading investment over time is, on average, an optimal strategy for maintaining performance in the presence of adjustment costs. In addition, the effect of performance on investment behaviour differs between the two farm types.

Keywords: farm investment; performance; adjustment cost model; dairy sector; France (search for similar items in EconPapers)
JEL-codes: D92 Q12 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2019
New Economics Papers: this item is included in nep-agr and nep-eff
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https://ageconsearch.umn.edu/record/285033 (application/pdf)

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Working Paper: Farm performance and investment decisions: evidence from the French (Brittany) dairy sector (2019) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:rae:wpaper:201901

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