Definitions of farm entrepreneurship

A variety of definitions became apparent.

For McElwee (2004) farmers are defined as those employed on a part or full time basis in a range of farming activities; they are primarily dependent on the farm and agriculture in the practice of cultivating the soil, growing crops and raising livestock as the main source of income.

For Dollinger (2003), entrepreneurship is the creation of an innovative economic organisation (or network of organisations) for the purpose of gain or growth under conditions of risk and uncertainty. This definition, however, assumes that all farmers are engaged in the farm business for financial gain or growth, and clearly this is not the case.

Schiebel (2002) showed that successful entrepreneurs differ in terms of three personality traits (success factors):

· Locus of control of reinforcement (belief in the ability to control events)

· Problem-solving abilities

· Social initiative is expressed through a person’s dominance, liveliness, social boldness and abstractedness. This empirical assessment of social initiative, using a representative sample of male and female farmers in Austria (881 respondents), showed a very low degree of social boldness and that liveliness increases with age. Female farmers were found to have a higher degree of dominance than their male equivalents.

Entrepreneurial skills The environment in which agricultural entrepreneurs operate is constantly changing and developing, as farmers adapt to the vagaries of the market, changing consumer habits, enhanced environmental regulations and so on. Running an enterprise successfully in this dynamic setting requires substantial tangible resources, such as physical or financial capital. Besides material assets, the success of the enterprise is also dependent on the more intangible resources embedded in the enterprise, such as entrepreneurial capital. It is recognised that in markets characterised by dynamic change some entrepreneurs become alert and develop knowledge, making (deliberate) information investments that others do not (Busenitz et al., 2004).

Pressures on farmers

In the past, farmers have not needed to raise capital from sources external to the family network. For Gasson (1988) the family is the potential source of risk capital – capital, labour and information. As a consequence, this provided advantages to the farm enterprise. In more recent years, however, the ‘natural inheritance’ of farms has been eroded as a consequence of farmers’ children becoming more mobile and less desirous of remaining in a declining industry. Property prices in villages and rural communities have escalated, which has had the effect of precluding ownership by indigenous community members.

Other uncertainties in the farming industry include unpredictable seasonal climate changes, invasive pests, CAP reform, and labour market changes. Community changes in the rural economy are also becoming more evident, as the sector does not appear to regenerate its ageing population. The lack of younger farmers entering the farm business may well have serious implications for the farm sector.

In a study of the transition of the Dutch agrarian sector, Poot et al. concluded that entrepreneurs who want to diversify nearly always have to deal with obstructions, particularly from law and legislation. An important example of a barrier to diversification is that local development plans of the local government never take account of non-agricultural activities in the agrarian area. Another barrier to diversification is that the legislation around working conditions and food safety frequently causes problems in the combination of care and agriculture. The last important obstruction may be protests and resistance to new developments (McElwee, 2006).

Clearly, the political, social and economic environment is important. For example, Polish agriculture is characterised by a highly fragmented agrarian structure. Small-scale production has a major influence on the functioning and competitiveness of Polish farms and results in high transaction costs and problems with sales (Halicka and Rejman, 2001).

Other farmers continue to run their farm business while taking paid employment, either within the sector (usually as agricultural sub-contractors) or outside the sector.

Interestingly, Sikorska (2001) concluded that the entrepreneurial activities of farmers in Poland are strictly connected with the demand for their services within the neighbourhood locality. She suggested that this means the closer to conurbations a farmer operates, the more activities are undertaken. In this respect the local business environment, access to markets and support facilities appear to be important.

Gasson (1988) also suggests that ‘better-educated farmers are known to make greater use of information, advice and training, to participate more in government schemes and be more proactive in adjusting to change and planning for the future of the business’. Higher levels of education seem to be linked to the characteristics of both farmers and farms, including larger farms and more pluriactive businesses.