Entrepreneurial Skills and their Role in Enhancing the Relative Independence of Farmers

General introduction

Research context

In the last few years the aims of the EU’s Common Agricultural Policy have moved towards a more market orientated framework, coupled with a shift in the associated policy instruments from price support to direct payments. Furthermore, the role of agriculture is no longer limited to the production of food and fibre; it also contributes actively towards sustainable and rural development.

As a result of these changes, farmers have the chance to benefit from market opportunities and to take greater responsibility for the success of their businesses; in other words, farmers theoretically have more freedom to farm as they wish.

As a consequence, the demands placed on farmers with regard to required skills have also changed. Some years ago, the skills a farmer needed were related in the first instance to the production of good quality food and operational management. Today, with the changes in the political and market environment, farmers need additional skills in the fields of marketing and selling, strategic management, networking and, above all, skills in finding and realising new business opportunities – in other words: in addition to production skills, farmers nowadays need entrepreneurial skills.

Unfortunately, decades of payments under the CAP have encouraged farmers to look to the state to give them guidance on farm management rather than helping them to anticipate or to innovate as individual farm entrepreneurs. In addition, farm associations and other collective bodies have focused on administering and lobbying for CAP payments rather than on developing the capacities of their members in terms of entrepreneurialism (see Winter 1997 for the example of England). The same could be said of farm education institutions, colleges and universities.

In the last few years there have been changes in farmers’ awareness, in the agricultural business, among researchers and within government towards an entrepreneurial culture in the farming business (e.g. De Lauwere et al., 2002). But the expectation directed at farmers is still that they should become more entrepreneurial, as the call for this project demonstrates.

The EU funded project Developing Entrepreneurial Skills of Farmers, of which this publication constitutes the final report, was initiated in order to find answers to some crucial questions connected with the subject and to elaborate recommendations on how to improve the political and economic framework in order to support farmers in developing entrepreneurial skills.

Research objectives and research questions

Research objectives

In addressing the issues described in the previous section, the objectives of the project were twofold:

· To identify and analyse the economic, social and cultural factors which hinder or stimulate the development of entrepreneurial skills, reflecting the strategic orientation of the farm

· To elaborate strategies and tools for improving these factors for different farming strategies

These objectives were pursued at two levels:

a) At the level of the political, economic, social and cultural framework

b) At the level of the personal skills of farmers

Research questions

The idea of focusing on skills in the debate about entrepreneurship is relatively new (Vesala 2008). In more recent publications, such as EC (2006b) or CEDEFOP (2008), skills are mentioned but are not defined or even named specifically. Consequently, to avoid a discussion similar to those about the concept of entrepreneurship as summarised in McElwee (2005) and Vesala (2008), it was necessary to develop a common understanding of the concept of entrepreneurial skills and their importance for the farming sector and rural development.

The research questions which addressed this challenge were as follows:

· What is the relevance of the concept of entrepreneurship for the farming business?

· How could a concept of entrepreneurial skills relevant to the farming business be described?

· Which skills can be called ‘entrepreneurial’ and why?

Farmers themselves have an understanding of their own entrepreneurial capability and skill set and are able to say how that skill set needs to be developed. Thus, the empirical research questions were:

· How and why do farmers develop entrepreneurial skills?

· From the point of view of farmers: which economic, political, social and cultural factors influence the development of farmers’ entrepreneurial skills in a positive or negative way?

· How can the development of farmers’ entrepreneurial skills be promoted both at the level of the overall (political, economic and institutional) framework and at the level of the farmer himself?

Thus, the focus of the analysis lies on the view of farmers, which is then compared with the view of experts from the agricultural socio-technical network.

In order to cope with the new environment, different strategic routes are available to farmers. One is to intensify conventional production by increasing volume, thereby engendering efficiency and effectiveness, and by pursuing selective and well-managed specialisation. However, a number of diversification strategies are also available. For example, the farm enterprise may be expanded by adding on tourism or other forms of non-agricultural business, or by forward or backwards integration in the value chain, by engaging in food processing, by direct marketing, or by organic production. These strategic alternatives are not necessarily mutually exclusive but can be used in various combinations. The idea of taking the diversity of strategic orientations as a possible starting point for studying the development of entrepreneurial skills is supported by the fact that the emergence of multifunctional farm enterprises is in line with the aims of Agenda 2000, which emphasizes the contribution of agriculture to sustainable rural development. Rural development, as the second pillar of the CAP, implies that a new, more active and market-oriented relation to the agro-food supply chain as well as to surrounding rural areas in general will be adopted on farms. However, it is evident that the actual manifestations of these entrepreneurial relations vary, for example, between the cases of monoactive conventional farms and diversified farms. Therefore, a careful examination of how the development of entrepreneurial skills is related to the above-mentioned strategic alternatives and to the contextual factors of these alternatives in rural areas has also been integrated into the project’s structure.