What may determine off-farm income? A review

Abstract

Farming is treated as one of the riskiest businesses. Political decisions, especially these related to the agricultural sector, may be treated as of a great importance. As a consequence, farm owners seek to diversify their sources of income and run other strategies aiming to stabilize their earnings i.e. by off-farm activities. The paper selected key groups of the determinants of the off-farm income with the aim to evaluate the current state and to propose further steps of the detailed analysis. The authors identified the mechanisms how the particular instruments influence farmers’ decisions on generating the off-farm income. It may be concluded that the significance of direct payments is still very high. Subsidies generally discourage farmers from the non-agriculture employment. The influence of socio-demographic characteristics is significant, however, the strength of this impact is determined by the additional factors like the situation in the labour market. In case of environmental determinants, it should be noted that there is a limited group of factors that may be out of control by the farm operators. The value added of the article is an attempt to identify the mechanisms how the particular instruments may influence farmers’ decisions on generating the off-farm income. The article finishes with the authors’ recommendations for further empirical studies.