Investment and Financial Constraints in European Agriculture: Evidence from France, Hungary and Slovenia
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The article investigates the investment and financial constraints for French, Hungarian and
Slovenian farms using FADN panel data with different econometric estimation approaches.
Farm gross investment is positively associated with real sales growth and cash flow implying
the absence of soft budget constraint. Gross farm investment is positively associated with
investment subsidies. Specific results by country are found depending on farm indebtedness.
Investment subsidies can mitigate some capital market imperfections in short-term, while on
long-term what is crucial is farm sale ability to successfully compete in the output market
gaining sufficient cash flow for farm competitive survival and investment.