Family farm succession in two Transylvanian villages- what future for the structure of

smallholdings?

Family farm succession

The study of transmission of responsibility for decision making within the farm family.

Why study family farm succession?

• To know who is making decisions

• To correctly target policy

• To better visualise future transformations

(Gasson and Errington 1993, Errington and Lobley 2002)

Succession/Successor Effect (Potter and Lobley 1996)

Farm

No Successor

ExtensificationIntensification

Parent

Successor

Succession cycle (Kemp 1999, Calus 2008)

Succ

esso

r Sele

ction

Succession process

Successor in charge

Birth of new generationRetirement of previous generation

Death of parents

Inheritance event

Farmtransfers

• Study developed by Andrew Errington in early 1990s

• Standardised quantitative survey

• Performed in many regions of America, Canada, Europe and also Japan in last 20 years

Farmtransfers in Transylvania

• Survey performed in S and in T in winters of 2009 and 2010

• Different methodology, so fewer results

Village S (Romanian) Village T (Hungarian)

Romanian 1790 5

Roma 174 50

Saxon 60 0

Hungarian 30 986

Total 2048 1041

Ages and Farm Sizes

Hungarian village

Romanian Village

Japan(2001)

USA: Iowa 2001

USA: Virginia 2001

England 1997

Canada: Ontario 1997

Canada: Quebec 1997

Average age of respondent

67 56 57.1 54.0 59.8 55.1 50.7 46.9

Standard Deviation

19.0 14.0 10.7 14.5 12.9 12.4 12.7 11.1

Surface Area (ha)

20.74 24.1 4.9 189.3 64.9 163.8 122.8 116.8

Standard Deviation

65.56 53.81 12.8 205.0 109.3 182.6 136.2 120.0

Farm size

>1 1->2 2->5 5->10 10->20 20->50 50->100 >1000

5

10

15

20

25

30

35

Farm Size (ha)

Hungarian DataRomanian Data

Farm Size (ha)

Perc

enta

ge o

f res

pond

ents

Age of farmers

1 2 3 4 5 6 7 80

5

10

15

20

25

30

35

Distribution of farmers by age

Romanian FarmersHungarian FarmersTotal farmers

Retirement plansRomanian Hungarian Romanian

Sample (Nemenyi)

Hungarian(Nemenyi)

Japan England 1997

France 1993

Never Retire (from farm work)

59.5 26.1 66.4 33.12 44.5 12.9 6.4

Semi Retire 26.2 43.5 8.8 37.1 53.4 28.9

Completely retire

14.2 30.4 14.3 66.88 18.5 33.7 64.7

Don’t know - - 8.8 - - - -

Discuss with family?

27.1% 47% 60.3% 32%

Identification of successorNationality of farmer

Total Romanian

Hungarian

Romania (Nemenyi)

England Japan Ontario Quebec Iowa Virginia

% identification of successor

56.9 62.2 51.6 59.15 52 49.8 39.8 42 28.8 30.8

Data from this survey, Nemenyi 2007 and Uchiyama 2007

•Romanian respondents may confuse ‘successor’ with ‘inheritor’

1 5 100 >1000

2

4

6

8

10

12

14

16

18

20

Farms by surface area (Romanian Village)

Without successorSuccessor

Surface Area (ha)

Freq

uenc

y

In both ethnicities, there is a greater probability of presence of a successor where the farm is over 5ha in size. This is consistent with research linking likelihood of succession with farm size (Errington and Lobley 2002, Calus 2009). In order to have a farm over the size of 10ha (due to the effects of the land restitution law 18/1991, where original applications were limited to a maximum of 10ha), the farmer must have invested in his farm after decollectivisation either through purchase of land, renting land or investing time in subsequent land restitution claims.

In both ethnicities, there is a greater probability of presence of a successor where the farm is over 5ha in size. This is consistent with research linking likelihood of succession with farm size (Errington and Lobley 2002, Calus 2009). In order to have a farm over the size of 10ha (due to the effects of the land restitution law 18/1991, where original applications were limited to a maximum of 10ha), the farmer must have invested in his farm after decollectivisation either through purchase of land, renting land or investing time in subsequent land restitution claims.

1 5 100 >1000

2

4

6

8

10

12

14

Succession of farm by surface area (Hungarian Village)

Without SuccessorSuccessor

Surface area (ha)

Freq

uenc

y

Activity of successor• 50% designated successors

have no active role on the farm (either working or studying elsewhere)

• Where successor works on farm, has small decision making responsibility (beginning of succession process)

• Level of responsibility of successor correlated with age

Inheritance and succession• Three elements of farm

replication: retirement, succession and inheritance (Errington and Lobley 2002)

• Romanian inheritance laws and traditions follow Napoleonic tradition

• What influence of Communist notions of ‘property’ and therefore inheritance for small farms?

Retirement

Succession

FARM REPLICAT

ION

Inheritance

Ethnic and generational differences in inheritance

•Hungarians more likely to pass on land in one unit

•Younger farmers more likely to pass on farm in one unit (to one.

Retirement and Succession• Importance of discussion of

retirement plans for future planning

• Lack of communication creates ‘Nash Equilibrium’ -neither successor nor decision maker can make changes to the farm/plans for the farm due to lack of information about the other’s intentions (Calus 2009)

• Hungarian families were more likely to discuss plans for retirement with their families than Romanian ones

Succession/Successor Effect (Potter and Lobley 1996)

Farm

No Successor

Extensification

Intensification

Hypotheses for absence of succession ladder

• Short time horizons -> lack of long term planning

• Block to retirement• Issue of ‘ownership’,

property• Lack of

intergenerational discussion

Succession cycle (Kemp 1999, Calus 2008)

Succ

esso

r Sele

ction

Succession process

Successor in charge

Birth of new generationRetirement of previous generation

Conclusions?

• Succession as defined by Errington and other academics does exist in Romania

• Weak succession ladder• Division between

succession and inheritance

• Issues of communication and inability to retire