Family farm succession: evidence from absorptive capacity, social capital, and socioeconomic aspects

Abdala, Rafael Gonçalves; Binotto, Erlaine; Borges, João Augusto Rossi

doi:10.1590/1806-9479.2021.235777

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Brasil

Revista de Economia e Sociologia Rural

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ARTICLE • Rev. Econ. Sociol. Rural 60 (4) • 2022 • https://doi.org/10.1590/1806-9479.2021.235777 copy

Family farm succession: evidence from absorptive capacity, social capital, and socioeconomic aspects

Sucessão familiar rural: evidências da capacidade absortiva, capital social e aspectos socioeconômicos

Authorship SCIMAGO INSTITUTIONS RANKINGS

Abstract

Farm succession is a process socially built from the preparation of the successor and the farm to meet a family business’ expectations. This study aimed to identify how social capital, absorptive capacity, and socioeconomic characteristics influence farm succession. The survey was conducted sampling 82 soybean and corn Brazilian farmers. The questionnaire measured socioeconomic characteristics, Absorptive Capacity (AC), and Social Capital (SC). To test the influence of AC, SC, and socioeconomic characteristics on farm succession, Spearman correlation coefficient (r_s) was performed. Results showed that the absorptive capacity can influence farm succession through acquisition, assimilation, use, and transformation of external knowledge into decision making, supporting the definition of successors. Results also suggested that social capital plays an important role to form relationship networks, stimulating discussions, and supporting the designation of successors. The socioeconomic characteristics ‘percentage of family income from the farm, participation in courses and lectures, and being a cooperatives member’ also presented a significant positive correlation with farm succession. Issues related to the capacity to absorb external knowledge, social and symbolic capital and generational transference can be fundamental in the continuity of the family farming business.

Keywords:
knowledge; socioeconomic characteristics; successor; participation; cooperative; networks

Category	Variable	Definition	Reference	Measurement Unit
Succession Variables	Succession Discussion	The family discusses the succession of farm	Keating & Little (1997)Keating, N. C., & Little, H. M. (1997). Choosing the successor in New Zealand family farms. Family Business Review, 10(2), 157-171. http://dx.doi.org/10.1111/j.1741-6248.1997.00157.x http://dx.doi.org/10.1111/j.1741-6248.19...	Yes
	Succession Discussion	The family discusses the succession of farm		No
	Succession	Designated successor	Micheels & Nolan (2016)Micheels, E. T., & Nolan, J. F. (2016). Examining the effects of absorptive capacity and social capital on the adoption of agricultural innovations: a Canadian Prairie case study.Agricultural Systems,145, 127-138. https://doi.org/10.1016/j.agsy.2016.03.010 https://doi.org/10.1016/j.agsy.2016.03.0...	Yes
	Succession	Designated successor		No
Socioeconomic Variables	Age	The age of the farmer	Bertoni & Cavicchioli (2016a)Bertoni, D., & Cavicchioli, D. (2016a). Farm succession, occupational choice and farm adaptation at the rural-urban interface: the case of Italian horticultural farms. Land Use Policy, 57, 739-748. http://dx.doi.org/10.1016/j.landusepol.2016.07.002 http://dx.doi.org/10.1016/j.landusepol.2...	years
	Gender	The gender of the farmer	Bertoni & Cavicchioli (2016a)Bertoni, D., & Cavicchioli, D. (2016a). Farm succession, occupational choice and farm adaptation at the rural-urban interface: the case of Italian horticultural farms. Land Use Policy, 57, 739-748. http://dx.doi.org/10.1016/j.landusepol.2016.07.002 http://dx.doi.org/10.1016/j.landusepol.2...	Male
	Gender	The gender of the farmer		Female
	Experience (years)	Experience in the farm	Micheels & Nolan (2016)Micheels, E. T., & Nolan, J. F. (2016). Examining the effects of absorptive capacity and social capital on the adoption of agricultural innovations: a Canadian Prairie case study.Agricultural Systems,145, 127-138. https://doi.org/10.1016/j.agsy.2016.03.010 https://doi.org/10.1016/j.agsy.2016.03.0...	years
	Children in the Farm	The number of children over 15 residing on the farm	Bertoni & Cavicchioli (2016a)Bertoni, D., & Cavicchioli, D. (2016a). Farm succession, occupational choice and farm adaptation at the rural-urban interface: the case of Italian horticultural farms. Land Use Policy, 57, 739-748. http://dx.doi.org/10.1016/j.landusepol.2016.07.002 http://dx.doi.org/10.1016/j.landusepol.2...	Number of children
	Children Education	At least one child completed high school	Bertoni & Cavicchioli (2016a)Bertoni, D., & Cavicchioli, D. (2016a). Farm succession, occupational choice and farm adaptation at the rural-urban interface: the case of Italian horticultural farms. Land Use Policy, 57, 739-748. http://dx.doi.org/10.1016/j.landusepol.2016.07.002 http://dx.doi.org/10.1016/j.landusepol.2...	Yes
	Children Education	At least one child completed high school		No
	Farmer Education	Farmer Education Level	Micheels & Nolan (2016)Micheels, E. T., & Nolan, J. F. (2016). Examining the effects of absorptive capacity and social capital on the adoption of agricultural innovations: a Canadian Prairie case study.Agricultural Systems,145, 127-138. https://doi.org/10.1016/j.agsy.2016.03.010 https://doi.org/10.1016/j.agsy.2016.03.0...	Incomplete elementary school
				Complete primary education
				Incomplete high school
				Complete high school
				Incomplete technical school
				Complete Technical School
				Incomplete Higher Education
				Complete Higher Education
				Incomplete post-graduation
				Complete Post-Graduation
	Family on the farm	Number of family generations on the farm	Kerbler (2008)Kerbler, B. (2008). The influence of factors of the socio-geographical structure of mountain farms in Slovenia upon farm succession statuses and decisions. Acta Geographica Slovenica, 48(2), 277-303. http://dx.doi.org/10.3986/AGS48203 http://dx.doi.org/10.3986/AGS48203...	Number of generations
	Relatives Employees	Number of family members employees on the farm		Number of people
			Micheels & Nolan (2016)Micheels, E. T., & Nolan, J. F. (2016). Examining the effects of absorptive capacity and social capital on the adoption of agricultural innovations: a Canadian Prairie case study.Agricultural Systems,145, 127-138. https://doi.org/10.1016/j.agsy.2016.03.010 https://doi.org/10.1016/j.agsy.2016.03.0...	Yes
				No
	Training (hours)		Micheels & Nolan (2016)Micheels, E. T., & Nolan, J. F. (2016). Examining the effects of absorptive capacity and social capital on the adoption of agricultural innovations: a Canadian Prairie case study.Agricultural Systems,145, 127-138. https://doi.org/10.1016/j.agsy.2016.03.010 https://doi.org/10.1016/j.agsy.2016.03.0...	Number of hours of training
	Cooperativism	Member of Agricultural Cooperative		Yes
	Cooperativism	Member of Agricultural Cooperative		No
	Age	Age of farm since its foundation or acquisition by the family	Bertoni & Cavicchioli (2016a)Bertoni, D., & Cavicchioli, D. (2016a). Farm succession, occupational choice and farm adaptation at the rural-urban interface: the case of Italian horticultural farms. Land Use Policy, 57, 739-748. http://dx.doi.org/10.1016/j.landusepol.2016.07.002 http://dx.doi.org/10.1016/j.landusepol.2...	years
	Location	The state of Brazil in which the farm is located	Micheels & Nolan (2016)Micheels, E. T., & Nolan, J. F. (2016). Examining the effects of absorptive capacity and social capital on the adoption of agricultural innovations: a Canadian Prairie case study.Agricultural Systems,145, 127-138. https://doi.org/10.1016/j.agsy.2016.03.010 https://doi.org/10.1016/j.agsy.2016.03.0...	State
	Size	Farm size in hectares	Micheels & Nolan (2016)Micheels, E. T., & Nolan, J. F. (2016). Examining the effects of absorptive capacity and social capital on the adoption of agricultural innovations: a Canadian Prairie case study.Agricultural Systems,145, 127-138. https://doi.org/10.1016/j.agsy.2016.03.010 https://doi.org/10.1016/j.agsy.2016.03.0...	Own (hectares)
				Rented or leased OF third parties (hectares)
				Rented or leased FOR third parties (hectares)
	Farming operation	Main farming operation	Adapted from Micheels & Nolan (2016)Micheels, E. T., & Nolan, J. F. (2016). Examining the effects of absorptive capacity and social capital on the adoption of agricultural innovations: a Canadian Prairie case study.Agricultural Systems,145, 127-138. https://doi.org/10.1016/j.agsy.2016.03.010 https://doi.org/10.1016/j.agsy.2016.03.0...	Dairy production (cattle)
				Beef production (cattle)
				Agriculture
				Other (please specify)
	Income	Percentage of family income from the farming operation	Adapted from Micheels & Nolan (2016)Micheels, E. T., & Nolan, J. F. (2016). Examining the effects of absorptive capacity and social capital on the adoption of agricultural innovations: a Canadian Prairie case study.Agricultural Systems,145, 127-138. https://doi.org/10.1016/j.agsy.2016.03.010 https://doi.org/10.1016/j.agsy.2016.03.0...	1% to 25% of income
				26% to 50% of income
				51% to 75% of income
				76% to 100% of income
	Agricultural career phase	The current stage of my agricultural career	Micheels & Nolan (2016)Micheels, E. T., & Nolan, J. F. (2016). Examining the effects of absorptive capacity and social capital on the adoption of agricultural innovations: a Canadian Prairie case study.Agricultural Systems,145, 127-138. https://doi.org/10.1016/j.agsy.2016.03.010 https://doi.org/10.1016/j.agsy.2016.03.0...	I am just getting my farming operation
				I am expanding my farming operation
				I am maintaining my farming operation at a steady level
				I have started to reduce or scale down my farming operation
				I plan to sell my farming operation in the near future
	Employees	Number of employees (temporary and permanent employees)	Micheels & Nolan (2016)Micheels, E. T., & Nolan, J. F. (2016). Examining the effects of absorptive capacity and social capital on the adoption of agricultural innovations: a Canadian Prairie case study.Agricultural Systems,145, 127-138. https://doi.org/10.1016/j.agsy.2016.03.010 https://doi.org/10.1016/j.agsy.2016.03.0...	Fixed - Nº of people
				Temporary - Nº of people
				Total - Nº of people

Absorptive Capacity (AC)	Median	Standard Deviation
Potential Absorptive Capacity (PAC)	4.00	0.60
People on the farm often interact with other farmers to acquire new knowledge	5.00	0.86
Our employees regularly visit employees of other farms	4.00	1.35
We informally obtain industry information through lunch conversations with company representatives or informal conversations	3.00	1.26
We periodically meet clients or business partners to acquire new information	4.00	1.18
Our employees have frequent contact with financial advisors (e.g. accountants)	4.00	1.40
We quickly recognize how changes in laws affect our farm	4.00	1.31
We are slow to recognize changes in our consumer market	3.00	1.34
We quickly recognize technical changes that can be implemented in the farm	4.00	0.98
We quickly understand new opportunities to serve business partners	4.00	1.07
We spend a lot of time talking to technical advisors to recognize the market changes	3.00	1.28
We quickly analyze and interpret changing market demand	4.00	1.14
Cronbach’s α coefficient (PAC) = 0.7292
Realized Absorptive Capacity (RAC)	4.00	0.49
We consider changes in market demand for new products and services	4.00	1.13
Our employees record knowledge to be used in the future	4.00	1.00
We quickly recognize the usefulness of new knowledge in farms	4.00	0.98
Our employees hardly share practical experiences from outside agriculture.	2.00	1.29
Every month we discuss with advisors how changes in the market can be used to make changes in the farm	3.00	1.35
We allocate a lot of time to the application of new information on farm	3.00	1.11
It is clear to everyone how activities on the farm should be carried out	4.00	1.04
Information provided by buyers falls on deaf ears on farm	2.00	1.26
We have a clear division of tasks and responsibilities	5.00	1.10
We always consider how to better apply knowledge	5.00	0.82
We directly use external information on farm practices	4.00	0.91
Our employees know the products and services of the farm	5.00	0.88
Adopting external information on the farm contributes to improved profitability	5.00	0.69
Cronbach’s α coefficient (RAC) = 0.6980

Cronbach’s α coefficient (AC) = 0.83
Median absorptive capacity (AC) = 4.00

Social Capital (SC)	Median	Standard Deviation
People on our farm spend a lot of time in social events with people from other farms	3.00	1.27
People on our farm spend a lot of time at events organized by the local community	3.00	1.16
Our employees have the same educational level as employees of neighboring farms, which facilitates social relations	4.00	1.17
I have informal networks with customers, suppliers, and competitors	4.00	1.07
Other farmers can rely on we will not take advantage of them. even if there is an opportunity	5.00	0.98
In general, people on our farm will always keep the promises they make to people outside the farm	5.00	0.86
If the farm is in search of a business partner, I will comply with my obligations even if there is no contract	5.00	0.83
I believe that the partner companies would support me in times of trouble, so it is only fair that my farm also supports them.	5.00	0.85
People on our farm share the same ambitions and visions as other people from other farms in the region.	4.00	0.93
People on our farm are motivated to achieve collective goals in the region	4.00	0.97
I consider that our farm’s future is related to other firms in the region.	4.00	1.30
There are collective plans and strategies for the farm in my region	3.00	1.20
Local institutions provide important research and development support for my farm	4.00	1.33
People on our farm have already received training from University and local Colleges	2.00	1.30
On our farm, we receive lots of product and market information from local organizations	4.00	1.19
I receive more support from the Government and local organizations than from companies and industries	1.00	1.16
Establishing networks with suppliers and customers has a significant impact on developing new ideas in the farm	5.00	0.90
Establishing networks with suppliers and customers has a significant impact on the acquisition of resources	5.00	0.91
Establishing networks with suppliers and customers has a significant impact on the development of new activities in the farm	4.00	1.03
Cronbach’s α coefficient (SC) = 0.78
Median of Capital social (SC) = 4.00

Variable	Median	Standard deviation	Min	Max
Age of Farmer (years)	51	14.44	19	81
Farmer Experience (years)	18	12.17	0	50
Hours of Training and Lectures (per year)	30	65.60	0	360
Size in Hectares	355	3,263.34	12	20,000
Number of employees	4	25.00	0	185
Family Generations on farm	2	0.93	0	4
Relatives working on the farm	2	1.53	0	8
Age of farm since its foundation or acquisition by the family (years)	31	16.07	7	77
Children over 15 years living on farm	0	0.92	0	4

Variable	Definition	Category	Percentage
Gender	Gender of the farmer	Male	92.7%
Gender	Gender of the farmer	Female	7.3%
Education	Farmer education level	Incomplete elementary school	20.7%
		Complete primary education	7.3%
		Incomplete high school	2.4%
		Complete high school	18.3%
		Incomplete technical school	0.0%
		Complete Technical School	1.2%
		Incomplete Higher Education	9.8%
		Complete Higher Education	28.0%
		Incomplete post-graduation	2.4%
		Full Post-Graduation	9.8%
Training		Yes	87.8%
Training		No	12.2%
Cooperativism	Member of Agricultural Cooperative	Yes	75.6%
Cooperativism	Member of Agricultural Cooperative	No	24.4%
Location	The state of Brazil in which the farm is located	Mato Grosso	15.9%
Location	The state of Brazil in which the farm is located	Mato Grosso do Sul	84.1%
Farming operation	Main farming operation	Agriculture	72.0%
Farming operation	Main farming operation	Mixed (agriculture and livestock)	28.0%
Income	Percentage of family income from the farming operation	1% to 25% of income	4.9%
		26% to 50% of income	7.3%
		51% to 75% of income	18.3%
		76% to 100% of income	69.5%
Agricultural career phase	The current stage of my agricultural career	I am just getting my farming operation	4.9%
		I am expanding my farming operation	37.8%
		I am maintaining my farming operation at a steady level	56.1%
		I have started to reduce or scale down my farming operation	0.0%
		I plan to sell my farming operation in the near future	1.2%
Succession	Designated successor	Yes	43.9%
Succession	Designated successor	No	56.1%
Succession Discussion	The family discusses the succession of farm	Yes	62.2%
Succession Discussion	The family discusses the succession of farm	No	37.8%
Children Education	At least one child completed high school	Yes	69.5%
Children Education	At least one child completed high school	No	30.5%

Variable	There is a designated successor	They discuss succession
Potential absorption capacity (PAC)	0.3312*	0.0357
Realized absorbed capacity (RAC)	0.3459*	0.0745
Social Capital (SC)	0.3232*	0.0542
Age	0.0203	0.0648
Education	0.0927	0.0949
Experience	-0.1086	0.1697
Age of farm since its foundation or acquisition by the family	0.145	0.0495
Young over 15 years of age residing on the farm	0.2017	-0.1115
Young that completed high school	0.0521	-0.1885
Size in Hectares	0.1018	0.1334
% of income from farm	0.2663*	0.0256
Number of employees	0.0877	0.1367
Number of generations that passed through the farm	0.2041	0.0402
Number of family members working on the farm	0.1131	0.0573
Hours spent with training and lectures	0.2482*	0.1099
Participation in Lectures	-0.0458	0.1706
Member of Cooperative	0.1019	0.2600*

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[1] Source: Literature review (2018).