Working paper 8/2024 by S. Turchetti and T. Ferraresi
Despite its long-standing presence in the debate, the “farm income problem”, namely the gap between agricultural incomes and the incomes of the other sectors, has been usually tackled separately by either macroeconomic approaches or microeconomic studies. In this work we integrate both approaches. Firstly, by employing input-output techniques to evaluate both the profitability and the positioning of Tuscan agriculture in agri-food value chains. Secondly, we build up a novel microeconomic dataset of Tuscan firms and assess how macroeconomic indicators are mirrored by the performances of firms serving the agri-food value chain. The results show that the structure of the food value chain impacts agricultural firm profitability.
JEL codes: Q12, Q18, R15
Keywords: farm income problem, input-output analysis, agri-food value chains
The copious literature on the problem of profitability in agriculture, that is, the gap between agricultural incomes and incomes in other sectors, has usually kept the macroeconomic and microeconomic approaches separate. In this paper we try to integrate the two approaches. First, using input-output techniques to estimate both the profitability and the positioning of Tuscan agriculture in agribusiness supply chains. Second, in order to assess whether macroeconomic indicators are reflected in the performance of firms serving the agrifood value chain, we constructed a microeconomic archive using tax data. The results show that the structure of the value chain has an effect on the profitability of agricultural enterprises.
