PR - Incentives And Socioeconomic Factors Influencing Investment Behaviour In Agriculture

Investment decisions in Danish agriculture don’t always comply with the classical investment theory. This provides the motivation to analyze how socioeconomic factors and investment incentives affect farmers’ investment behavior. The analysis is accomplished by investigating three research questions concerning the relationships between different socioeconomic factors, investment incentives and farmers’ investment behavior. The results are obtained from a survey among Danish pig producers that has been analyzed by the use of logistic regression. The results show that young farmers with a high production and high debt are more likely to invest in real agricultural assets than other farmers. Furthermore, differences in socioeconomic factors are found to have a significant influence on the investment incentives among farmers.

One implication is that advisors have to be more aware of the goals of the individual farmer when new investments are evaluated. Another implication is the need for an improved knowledge about how to differentiate the investment policies implemented to enhance the commercial opportunities for rural people.