Academic journal article Journal of Small Business Management

Diversification and the Entrepreneurial Motivations of Farmers in Norway

Academic journal article Journal of Small Business Management

Diversification and the Entrepreneurial Motivations of Farmers in Norway

Article excerpt

A series of significant pressures but also new opportunities face the agricultural sector in developed economies. Farm diversification is presented as a political solution and a viable business strategy and highlights the entrepreneurial side of farmers. This paper is a unique attempt to address the question of motivation for farm diversification using Norwegian data. The results demonstrate that social motivations are as important as economic motivations, that is, there are substantial differences in which motivations underpin different types of diversification. This suggests, first, that the literature could gain from engaging more in the variation of motivational drivers than general trends, and second, that farmers need different forms of support to develop their entrepreneurial skills. With a data set derived from a large survey (N = 1607) of Norwegian farm holdings, we use a multinomial logistic regression model to analyze how six farm diversification categories are differently influenced by different types of motivations and other background variables.

Introduction

Throughout developed economies, a series of major trends affect farm businesses and the lives of farmers. There is a growing demand not only for changes in food production techniques but also in nonagricultural functions and services. New technological developments characterize agricultural production. These shifts in production coupled with strong emerging new markets that represent both severe pressures and open new opportunities for farmers require adaptation strategies, increased innovation, and entrepreneurship. Increased farm diversification is therefore seen as a necessary development. Farm and rural business support schemes and policy in the European Union (EU) as well as in Norway highlight a political will to increase entrepreneurship and diversification in farm businesses. Developing the entrepreneurial skills of farmers is one of the priorities of the Norwegian Ministry of Agriculture and Food (Ministry for Agriculture and Food 2007). However, meeting these priorites requires knowledge of what constitutes farm-based entrepreneurship.

The research question in the present study is therefore centered on the reasons and motives for starting additional activities: What motivates farmers to diversify and into what kind of activities? We address this question through analysis of a Norwegian data set.

This paper contributes to filling some significant research gaps. We highlight the highly fragmented pattern of entrepreneurial motivation behind different categories of farm diversification, and we study motivations behind diversification in Norwegian agriculture: an under-researched phenomenon.

Norway is a special case. Located in the far north of the Northern hemisphere, with a diverse arrondation and small-scale farm structure, the conditions for agricultural production are difficult. Many farms are remote from urban centers that would provide "easy" markets. Farms are passed on from generation to generation meaning that there is still considerable pressure to "carry on the tradition" ("odelsgutt").

The Norwegian government provides the agricultural sector with a high level of subsidies; Norwegian agriculture is significantly more subsidized than anywhere else (except Japan, Switzerland, and Iceland) including the EU, and there is also a high level of regulation of agricultural production and structure. There is a long tradition for pluriactivity (Almas 2004), and more than 50 percent of Norwegian farmers have diversified from their core farm activity. Scarce rescources and a small scale structure in the agricultural sector have always been seen as drivers of Norwegian farm diversification, but the levels of income generated by farmers' additional income appears to be rather modest (Kjesbu et al. 2007). Furthermore, it seems that economic rationality alone is not able to explain farmers business adaptations well (see, e. …

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