Effect of agricultural policy on succession decisions of farm households

Policymakers, economists, and researchers have recently been interested in assessing the impact of farm program payments on the growth and survival of farm businesses. Planning for succession is an integral part of managing a farm business. This study uses farm-level data to investigate the impact of government farm policy and farm growth on both succession decisions and the likelihood of intra-family transfers of the farm business. Results indicate that succession decisions are significantly influenced by government farm policy, farm wealth, age, and educational attainment of current farm operators. Results show that off-farm work by operators and spouses and regional location are positively correlated with non-family farm succession decisions. On the other hand, farm ownership, educational attainment, and marital status of the operator increase the likelihood of family-based succession decisions. However, in the presence of retirement income from other sources such as pension, parents are less likely to have a family successor.