Building a typology of farms based on their performance: a tool to support agricultural policy-making

Abstract

Within the same agricultural system, there is substantial heterogeneity in farms’ performance depending on farms’ structural features and farmers’ decision-making. This paper proposes a policy-oriented farm typology-building approach that groups farms in the same agricultural system into categories based on their economic and environmental performance. For this purpose, latent profile analysis (LPA) is used, since it enables both the assessment of profile-specific synergies/trade-offs among performance indicators and the implementation of a three-step procedure to account for the covariates that characterize the resulting farm profiles. As an illustrative case study, this methodological proposal is applied to categorize Spanish farms included in the rain-fed field crops agricultural system. The results show that the proposed typology-building approach is useful for agricultural policy-making, as it allows for a better evaluation of how farms contribute to the achievement of policy objectives and the design of differentiated policy instruments accounting for the performance synergies/trade-offs across farm profiles (i.e. policy tailoring and targeting).