Understanding the confidence of agricultural producers in an emerging market

Abstract

In this paper, we address the confidence of the agricultural producers in their prosperity as a driver of development. The agricultural sector development is highly dependent on short term investment decisions for sowing area, breeding, among others, which in turn is mediated by confidence. Agricultural producer confidence is continually measured in Argentina by CREA, a non-profit organisation composed of groups of producers spread across the country striving for innovation and best practices diffusion. We leverage this measurement methodology to propose a structural equation model to explain confidence by an exhaustive collection of factors affecting the business at company, sector or economy level, providing critical insight about the range of policies that would enable agriculture to grow. High regulation and tax burdens prevailing in the market during the past decades have been identified as relevant hindrance factors to confidence. On the enablers side are the respect for property rights and the organisation effectiveness actively fostered by CREA.