Contingent allocation of the agri-food budget: comparison of farmer and non-farmer preferences

Authors

• Eija Pouta Natural Resources Institute Finland (Luke)
• Eero Liski Natural Resources Institute Finland (Luke)
• Annika Tienhaara Natural Resources Institute Finland (Luke)
• Tuija Lankia Natural Resources Institute Finland (Luke)
• Jyrki Niemi Natural Resources Institute Finland (Luke)

DOI: https://doi.org/10.23986/afsci.115415

Keywords:

agricultural policy, budget allocation, compositional data analysis

Abstract

Agricultural production faces diverse and often conflicting expectations, such as considerations related to environmental protection, food security and risk management, as well as strengthening the profitability and competitiveness of domestic production. In this study, we applied the contingent allocation method to a national agricultural budget to analyse the preferences of farmers and other citizens for allocating budget funds. Survey data collected from 2014 citizens and 518 farmers were used in compositional data analysis where it is considered that each spending decision bears an opportunity cost, and the decision maker faces trade-offs across budget priorities. The allocations of farmers and non-farmers were found to differ considerably. Farmers emphasized agricultural income and the economic resilience of farms as well as the self-sufficiency in food production and soil conditions. Non-farmers emphasized environmental public goods. The allocations were used to form compositional respondent clusters. The first cluster emphasised multiple objectives for agricultural policy, whereas the second cluster was clearly production oriented and the third cluster environmentally oriented. The results highlight the differences between farmers and non-farmers challenging the planning of legitimate agricultural policy.