Model under current CAP continuity assumption

The first model has been implemented under the hypothesis of maintenance in the coming years of the current CAP scenario and it is inclusive of both intentions to change using sales and rental market. Table 12 shows the results of this model.

Table 12. Results from the first model: Current CAP (baseline) scenario.

Category Variable code Var. description Increase Decrease

Farm characteristics: d_livest Livestock specialization 1.634* -1.020

d_fru Fruit specialization 0.051 0.914

d_cere Cereals specialization 0.463 0.481

HectLanProp Farm dimension -0.021* 0.009

d_rentIn Land rented in 2.139*** 1.962***

d_saleCon Sales contract ownership 0.888 -1.083**

Innovation Willingness to innovate 2.311*** -2.497**

Int_sell Internet use to sell products 2.250** 0.409

PayRevMore50% SFP on revenue more than

50%

-0.123 0.369

d_belowAvPay SFP below the sample average 0.725 0.570

Household characteristics: NfamiMemFullT Nº worker full time 0.124 0.496*

NfamiMemPartT Nº worker part time -1.031 0.666*

NExternalFullT Nº external worker full t. -0.124 -13.554

NExternalPartT Nº external worker part t. 0.067 -0.158

d_Over65 Over 65 in family -1.695** 0.606

d_Malein Fam Presence male in family -16.041 1.315

d_Unemployed Unemployed In family -1.099 -0.538

MinorsInFam Minors in family 0.136 1.315

Farmer characteristics: Age Age of the farm owner 0.012 0.013

d_highedu High education level 1.203** 0.539

d_livonFarm Live at the farm -

2.456***

-0.152

d_Female Female farm owner -0.845 -0.769

Geographical characteristics:

d_moun Farm located in mountain -1.335 -16.614

d_plain Farm located in plain 1.257 0.062

Constant: -3.861* -4.894**

The results highlight the farm characteristics as the main determinants of changes in farmland dimension. Among these, carrying out a livestock activity (d_livestock) has a positive effect on the intention to increase the farm size. That could be due to the high profitability of the productions consequent to good market price of milk and milk products at the time of the survey. In addition, the increase would be driven also by the necessity to have always more land per animal in order to respect the thresholds of nitrate pollution and others environmental measures. Moreover, also the amount of the direct payments received from livestock farmers can influence this result. In fact, under the baseline scenario livestock farmers would receives higher amount of payments compared with those obtained by others specializations. On the one hand, it is because the amount of the payments in the historical reference period was high for this typology of farms. On the other hand, it is because livestock farmers receive an additional payment coupled to the production (article 68 of regulation No 73/2009). This would lead to high amount of payments which as a consequence may result in higher marginal productivity of the land of the farms involved in this specialization. The farm dimension (HectLanProp) has a negative effect on the probability to increase the farmed area. This result, in contrast with the literature, can be justified by the fact that larger farms already benefit of economies of scale and can be less willing to increase size with respect to small and medium farms which want to achieve this type of economies. Farmers that have land rented-in (d_rentIn) have a higher probability to increase, and at the same time, to decrease the farm area; this could be due to different reason. On the one hand, the rental market gives the possibility to modify and fit the size of the farm as needed in an easy and quick way than sales market. On the other hand, past experience in the rental market gives farmers information and knowledge required to undertake negotiations with others farmers in order to change size (basically it could be claimed that they can adapt with lower transaction costs). Altogether this supports the idea that farms with land rent-in appear to have greater ability to adapt farm size, than those with only land in property, whatever the preferred direction of change, while they have not a precise intention in terms of increase/decrease. The intention to decrease the farmland is negatively affected by

the engagement in contracts (d_SaleCon) to commercialize the main products of the farm. The allocation of products guaranteed by contract commits the farmers to produce a given product in a certain quantity. Consequently it would determine a rise of the propensity to maintain the land endowment in order to meet the commitments of the contract. It could also be that the existence of ongoing contracts better guarantees farm profitability. The intention to adopt one or more new technologies in the coming years is positive correlated with the probability to increase and negatively correlated with the probability to decrease the farmed area (innovation). The internet use to sell farm product result significant as determinant for the farm to be in the increase category (Int_sell). This is in line with the increasing use of internet in all sectors and with the possible higher gains from the use of this tool. Particularly, it can increase the number of potential customers and markets as it improves the connections between people, particularly between economical actors, and provide the possibility to reach the word market. These factors can improve the production and lead to farm growth. Among household characteristics, the number of household members working full time and part time on farm (NFamiMemFullT, NFamiMemPartT) seem to be significant and this affects positively the intentions to decrease the land size. Households with high number of members employed in farm can be pushed by the economic crisis to diversify the job among members looking for off farm work. The presence in the household of relatives older than 65 years (d_Over65) is negatively correlated to the propensity to increase the farming area. The presence of over 65 components in the household would constrain farmer decisions in order to fit the farmed area with the availability labour force and the presence of successors inside the household. Farmer education level influences the intention to change the farmland size. Particularly, a high education level (d_higheduc) affects positively the intention to increase the farmed area. This would be due to the high management capacity and by the increase of the marginal productivity of the land operated by these farmers. The fact that the farmer lives on the farm (d_livOnFarm) have a negative effect on the probability to increase the farming area.