Interlinked diversification strategies: evidence from the US farm business households
Journal of Agribusiness in Developing and Emerging Economies
ISSN: 2044-0839
Article publication date: 27 April 2020
Issue publication date: 17 July 2020
Abstract
Purpose
The agricultural sector in the USA has experienced significant structural changes. For accommodating farm business, households have diversified their operations adopting various strategies—agricultural, structural, environmental, and income strategies. The purpose of this study is to analyze the factors influencing farmer’s diversification strategies while taking into account the simultaneous decision-making process.
Design/methodology/approach
This study uses a nation-wide farm household data from the US. The diversification decisions are analyzed using multivariate probit regressions.
Findings
The study suggests that agricultural, structural, environmental, and income diversification strategies are interlinked. Specifically, results indicate that, on one hand, environmental and income diversification strategies are positively interlinked. On the other hand, agricultural and structural diversification strategies are positively interlinked. Additionally, the factors representing location, farm, and farmer characteristics, farm type, and financial condition of the farm are major determinants in the choice of farm diversification strategies.
Research limitations/implications
In this paper, diversification activities are broadly classified under four strategies: agricultural, structural, environmental, and income. Depending on the context and country, the definition and strategy set may need revision.
Practical implications
Strong complementary between diversification strategies suggests that studies analyzing farm household decisions and strategies need to account for the simultaneous decision-making process. As decisions are interlinked, separately analyzing one specific strategy may lead to biased estimates. Farm business households need to develop multiple skills and flexible capacities to tackle farming-related issues, including structural changes, risk management, and income enhancing activities. Improving employment opportunities for the rural farming population can stimulate structural diversification.
Originality/Value
This paper contributes to limited literature about diversification by analyzing factors influencing different diversification decisions and finds interlinkage between decisions.
Keywords
Acknowledgements
Principal author’s time contribution in this study is supported from the Evans–Allen Project# TENX-1623-GFSHPP, Accn#1009664. Author (s) thank USDA/NIFA for the fund support.
Citation
Khanal, A.R. (2020), "Interlinked diversification strategies: evidence from the US farm business households", Journal of Agribusiness in Developing and Emerging Economies, Vol. 10 No. 3, pp. 253-268. https://doi.org/10.1108/JADEE-10-2018-0144
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited