On farm non-agricultural activities: geographical determinants of diversification and intensification strategy

An increasing share of farmer revenues derives from on-farm non-agricultural activities. This paper investigates the determinants in the choice to diversify by simulating farmers’ behaviours dividing the diversification decision into two steps: deciding the intensity of diversification. This two-step process is estimated by applying the Heckman sample selection model. The results confirm the relevance of on-farm diversification for risk exposure reduction for vulnerable farms. The worst external conditions exhibited no effect on the likelihood to diversify. However, farms located in marginal areas were more dependent for their livelihood on on-farm non-agricultural production. Moreover, closeness to urban areas reduces the probability of diversifying but had no effect on intensification.