Factors Affecting Participation of Italian Farmers in Rural Development Policy

In this paper a (micro)econometric approach is developed by considering the farmer likelihood to participate in different policy programs as linked to the objective of farmer to maximize their welfare. In this way we model farmers participation in policy support scheme by using a new institutional economics approach and conceptualizing the decision to entry as a contractual choice between two rural development types of policy. Different discrete choice modelling approaches are used to analyze the complementarity/ substitutability of different policy programs such as environmental-related measures and farm investment supports policy schemes and the main driving factors behind them. We use an extensive cross-sectional database related to the Italian FADN 2006. Results indicate that social capital and institutional factors should be taken much more into account in order to understand farmers likelihood to entry in policy support schemes. Location and farm(er) socio-economic features are also relevant factors. Moreover complementarity has been found between different policy schemes.