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This chapter opens the second part of the Volume, focusing on the small farms' role and dynamics within the evolving food system. Assessing small farmers' actual and potential contribution to the change towards a sustainable food and nutrition security requires a deep understanding of their strategic decision-making processes. These processes take place in a context highly conditioned by internal and external conditions, including the complex relations between farm and household, which are mapped and described. Building on an adaptation of Porter's model (Porter, 1990), the chapter investigates how farmers, given those conditions, define their strategies (in particular their innovation strategies) aimed at economic and financial sustainability through a multidisciplinary analysis of scientific literature. Internal conditions are identified in the light of the Agricultural Household Model (Singh & Subramanian, 1986) which emphasizes how family farming strategies aim at combining business-related objectives, and family welfare. Then, a comprehensive set of external conditions is identified and then grouped within eight categories: ‘Factors’, ‘Demand’, ‘Finance and Risk’, ‘Regulation and Policy’, ‘Technological’, ‘Ecological’, ‘Socio-institutional’ and ‘Socio-demographic’. Similarly, six types of strategies are identified: ‘Agro-industrial competitiveness’, ‘Blurring farm borders’, ‘Rural development’, ‘Risk management’, ‘Political support’ and ‘Coping with farming decline’.

As a response to global population growth and increasing demand for food, farmers have been complementing traditional agriculture practices with vertical farming (VF) and indoor hydroponic systems. To facilitate the growth of the VF industry, this paper aims to identify business model elements and their configurations that lead to high firm performance.

The research goals were met by conducting literature reviews coupled with a fuzzy-set qualitative comparative analysis (fsQCA) on five business model elements, “superior” OR “strong” performance as two possible outcomes, and the top-ranked global VF growers listed in the Crunchbase Database.

From the fsQCA results, it was observed that several business model configurations lead to strong firm performance. Vertical farms growing in urban settings and having strong customer engagement platforms, coupled with a presence of business-to-business (B2B) sales channels, are more consistently associated with superior performance. These results imply that the decision configuration of location, along with customer engagement activity and sales activity are differentiating factors between good firm performance and superior firm performance in the case of vertical farms.

This paper contributes to expanding the knowledge of business model theory, business model configurations and VF management, providing specific guidelines for vertical farm owners and investors related to decision-making for higher firm performance, as well as positive environmental, social and economic impact.

The new programming period of 2021–2027 of the European Union (EU) Common Agricultural Policy requires reconsidering the policy measures. In the new period, the European Commission is to allow each member state (MS) developing eco-schemes to support and/or incentivise farmers to observe agricultural practices beneficial for the climate and the environment beyond their mandatory requirements. The purpose of this paper is to compare the performance of organic and conventional family farms.

Organic farming under the organic farming measure of the Rural Development Programme is one of the most widely applied sustainable farming practices in the EU as well as in Lithuania. By assessing the ex post economic impact of the organic farming measure on farm performance indicators, the authors seek to reveal possibilities and obstacles for the implementation of sustainable farming practices. A counterfactual ex post impact assessment method – propensity score matching (PSM) analysis – was used to evaluate ex post economic impact of the organic farming measure on the performance of farming indicators.

The application of the PSM allowed assessing both the effectiveness of the implemented measure and possibilities for applying this measure in the future. The research has revealed that organic farming is less profitable and the gap between farm income in organic and conventional farms has increased during the period of 2007–2013.

The most comprehensive economic information about the farm activities from the Farm Accountancy Data Network (FADN) was used for the ex post economic impact evaluation of the organic farming measure in Lithuania. The matched groups of Lithuanian family farms (organic and conventional) were compared. The results of the research provide a new knowledge about the effectiveness of the organic farming measure in Lithuania and suggest the ways of their improvement in the future. The results can also be generalised to other countries with similar agricultural structure.

The purpose of this paper is to investigate the factors (farm, operator and household characteristics, along with farm type and regional location of the farm) affecting financial performance of new and beginning farmers and ranchers.

Returns on assets (ROA), a measure of financial performance widely used in the farm management literature, is the ratio of net farm income plus interest payment to total assets. This measure has been used by Gloy and LaDue and Gloy et al. to measure financial performance of farmers in New York. ROA is hypothesized to be a function of operator/farm characteristics and management strategies used to manage the farm. The independent variables hypothesized to affect the farm's financial performance encompass the following three areas: farm operator characteristics, farm characteristics such as production and marketing efficiency measures, and management strategies. All standard errors were adjusted for heteroscedasticity using the Huber–White sandwich robust variance estimator based on algorithms contained in STATA.

Results from this study show that although there is an inverted U‐shaped relationship between age of the operator and financial performance, management strategies such as increasing the number of decision makers, engaging in value‐added farming, and having a written business plan can lead to higher financial performance.

More than 50 percent of current farmers are likely to retire in the next five years. US farmers over age 55 control more than half the farmland, while the number of new farmers replacing them has fallen since the Farm Crisis period, 1982‐1987. Paralleling this shift in production, agriculture is in a decline in overall farm numbers. Concern in many states arises because the loss adversely affects the future of family farms, the farm economy and healthy rural communities. Additionally, the rapid decline in the entry of new and young farmers is an indication of rising barriers to entry, resulting in calls from within the farming community for public policy measures designed to aid new and beginning farmers.

This study investigates the economic outcomes of organic farming controlling for the four major aspects of a cropping system, including climate, genotypes, management and soil. Considering possible variations in treatment responses, this study also presents empirical evidence of heterogeneous treatment effects associated with spatial agglomeration or farm covariates.

Rice farm households data taken from the 2015 Agriculture Census is merged with township-level seasonal weather data, crop suitability index and average income per capita in Taiwan. To address the selection bias problem, the authors apply the Probit-2SLS instrumental variable (IV) method in the binary treatment model under homogeneous and heterogeneous assumptions.

It is found that organic farming leads to a significantly positive effect on rice farms' economic performances in terms of cost reduction and profit growth. This positive treatment effect is more sizable with spatial agglomeration. Furthermore, the treatment effect of organic farming is found to vary with the farm characteristics such as farmland area and the number of hired workers.

Two important implications for the promotion of sustainable agri-food production are inferred: (1) establishing organic agriculture specialized zones may benefit rural development; (2) providing economic incentives to small farms to expand their scale may be a more effective policy means to promote sustainable agri-food production.

The findings in this study complement the body of knowledge by drawing insights from the agriculture census data and providing profound evidence of the heterogeneous outcomes of organic farming due to spatial clustering and farm covariates.

The purpose of this paper is to estimate the effect of vegetable producers' inclusiveness in supply chain coordination on vegetable production performance and potential spillover effect on farm and non-farm income.

A comprehensive dataset comprised of 410 paired vegetable producers in China is applied. Propensity score matching (PSM) estimation method is used to control for the selection bias problem.

The empirical results indicate that contracting farming does not have significant effect on yield or profit of vegetable production, but promote producers to obtain quality certification. In comparison, cooperative membership has positive effects on the yield, profit and quality certification of producers. Additionally, cooperatives generate positive spillover effects on members' farm and non-farm income, though the results are sensitive to unobserved factors. The inclusion of spillover effects helps to find out the potential unobserved effects which are neglected by most studies and design better policies to promote the development of agricultural companies and farmer cooperatives.

First, empirical evidence is provided for theories regarding the roles of different supply chain coordination modes on producers. Second, the analysis on evaluating the effects of supply chain coordination also considers the spillover effect on the farming of other products and even non-farm work of involved producers. Third, a unique dataset comprised of 420 paired vegetable producers, based on an extensive survey is built.

Efforts to reduce farmers' market risks and improve buyers' access to farm commodities have encouraged contract farming (CF) in Ghana's cashew sector in recent years. Consequently, the existence of CF shows that farmers who use it may be benefiting from it, as it is their economic responsibility to decide how to sell agricultural products. However, the magnitudes of these benefits or otherwise have been inadequately explored. This paper aims to empirically estimate the impact of CF on farm performance and welfare of smallholder cashew farmers.

The study used probit-two-stage least square (probit-2sls) as a primary estimator to account for self-selection bias and endogeneity that could arise from both observed and unobserved heterogeneities among farming households to estimate the causal effects of CF on farm performance and household welfare.

The results indicated that participation in CF contribute significantly to the gains in farm performance (price margins, yields and net farm revenue) and welfare (consumption expenditure per capita), and that the non-participants of CF would have benefited substantially if they had participated. An analysis of the farm size disaggregated into small, medium and large with regards to the outcome variables produces mixed results.

It can be concluded that participating in CF enhances farm performance and household welfare.

While many other studies do not account for changes in farm performance and welfare due to differences in farm size or other observed factors, this study fills a crucial void.

The purpose of this paper is to investigate the impact of internet usage on financial performance of small farm business households in the USA. In particular, the authors want to assess the impact of internet usage on small farm businesses, where the owner’s main occupation is farming. Using a nationwide farm-level data in the USA and a non-parametric matching estimator, the study finds a significant positive impact of internet usage on gross cash income, total household income, off-farm income. The study further suggests that small farm businesses receive benefits from internet usage as it facilitates reduction in income risk through off-farm income sources, as well as a reduction in marketing and storage costs; households’ non-farm transportation and vehicle leasing expenses.

In this study, the authors use the “nearest neighbors” matching method in treatment evaluation, developed by Abadie and Imbens (2002). In this method, a weighting index is applied to all observations and “nearest neighbors” are identified (Abadie et al., 2004). Although matching estimation through the nearest neighbor method does not require probit or logit model estimation per se, the authors have estimated a probit model because it allows the authors to check the balancing property and to analyze the association of included variables with the likelihood of internet use.

The study suggests that small farm business households using the internet are better off in terms of total household income and off-farm income. As compared to the control group (which is counterfactual, representation of small farm businesses not using the internet), small farm businesses using the internet earn about $24,000-$26,000 more in total household income and about $27,000-$28,000 more in off-farm income. Also, small farm businesses using the internet earn about $4,100-$4,900 more in gross cash farm income compared to their counterpart. The estimate of ATT for NFI is not different from zero. However, gross cash farm revenue increased significantly.

To this end internet can provide an important role in information gathering. Internet is one of the convenient means to access and exchange information. Information and communication facilitation through internet have opened up new areas of commerce, social networking, information gathering, and recreational activities beyond a geographical bound. Producers and consumers can take advantages of internet in both collaborative and competitive aspects in economic activities as it can reduce the information asymmetries among economic agents.

Farmers will seek assistance in interpreting data and applying information to their farming operations, via the internet. Therefore, it is essential that land grant universities continue to improve the delivery of electronic extension and provide information in a clear and concise manner.

Studies in farm households have mainly investigated factors influencing internet adoption, purchasing patterns through internet, internet use, and applications. In most cases, impact analyses of communication and information technologies such as internet in agricultural businesses are discussed with references to large scale farm businesses. Thus, the authors know very little about access to the internet when it comes to small farm businesses and small farm households and about how it impacts well-being of small farm households.

Based on farm diversification's conventional and unconventional nature, the study intends to discriminate different profiles of farm diversification businesses. Furthermore, this study analyses the links between farm diversification efforts, (open) innovation networks as well as the environmental performance (EP) and financial performance (FP) of farms.

A questionnaire was administered through personal interviews with 160 fresh fruit farmers in an inland Portuguese region. Linear regression, latent class analysis (LCA) and multinomial logistic regression were used.

There are significant differences between the levels of diversification, performance and participation in (open) innovation networks of the three classes of farmers discriminated. Different types of diversification efforts and (open) innovation networks influence EP and FP, while FP and R&D projects are associated with the likelihood of being part of a farm diversification class. Moreover, this study shows that innovation networks, promoted by specialized agricultural advisors and R&D projects, are important forms of open innovation in the agricultural sector.

The study contributes to understanding the agricultural sector's diversification efforts and (open) innovation networks and their association with EP and FP. The conventional or unconventional nature of farm diversification was self-reported.

European and local institutions are advised to develop more R&D programs directed to farmers, including environmental and financial issues, besides comprising agricultural and non-agricultural diversification.

This study provides new insights to understand the association between diversification efforts, (open) innovation networks and agricultural businesses' performance.

The purpose of this paper is to explore the economic performance of Norwegian crop farms using a stochastic frontier analysis.

The analysis was based on a translog cost function and unbalanced farm-level panel data for 1991–2013 from 455 Norwegian farms specialized in crop production in eastern and central regions of Norway.

The results of the analysis show that the mean efficiency was about 78–81 percent. Farm management practices and socioeconomic factors were shown to significantly affect the economic performance of Norwegian crop farms.

Farmers are getting different types of support from the government and the study does not account for the different effects of different kinds of subsidy on cost efficiency. Different subsidies might have different effects on farm performance. To get more informative and useful results, it would be necessary to repeat the analysis with less aggregated data on subsidy payments.

One implication for farmers (and their advisers) is that many of them are less efficient than the estimated benchmark (best performing farms). Thus, those lagging behind the best performing farms need to look at the way they are operating and to seek out ways to save costs or increase crop production. Perhaps there are things for lagging farmers to learn from their more productive farming neighbors. For instance, those farmers not practicing crop rotation might be well advised to try that practice.

For both taxpayers and consumers, one implication is that the contributions they pay that go to subsidize farmers appear to bring some benefits in terms of more efficient production that, in turn, increase the supply of some foods so possibly making food prices more affordable.

Unlike previous performance studies in the literature, the authors estimated farm-level economic performance accounting for the contribution of both an important farm management practice and selected socioeconomic factors. Good farm management practices, captured through crop rotation, land tenure, government support and off-farm activities were found to have made a positive and statistically significant contribution to reducing the cost of production on crop-producing farms in the Central and Eastern regions of Norway.