UNDERSTANDING THE DETERMINANTS OF INVESTMENT REACTIONS TO DECOUPLING

The objective of this paper is identify the determinants of reaction to decoupling, focusing, in particular, on farm strategies and investment behaviour both on-farm and off-farm investment. The paper analyses a sample of 248 farm-households located in 8 EU countries, using decision tree algorithms. The factors emerging as determinants of an increase of on-farm investment as a reaction to decoupling are the existence of a successor, age, farm size, part time vs. full time head of farm. Allowing for the use of country variables, these tend to account already for the factors listed above and become the main predictors, followed by labour endowment, specialisation and expectations.

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