Economic performance of agritourism: An analysis of farms located in a less favoured area in Italy

Farms that operate in less favoured areas (LFAs) often suffer in achieving adequate profits. Diversification strategies, such as direct selling and offering recreational services, can play an important role in integrating earning sources and, as a consequence, increasing farm profitability. Such opportunities would depend on the efficient distribution and use of farm resources among different activities as well as the added value creation of farm output. However, achieving positive results is not obvious in LFAs due to different types of inherent constraints (geographical, social, economic). The paper aims to evaluate the role of agritourism in affecting the economic performance of multifunctional farms located in a less favoured area of Sardinia (Italy). To be more precise, using so-called working farm income as the main indicator resulting from balance sheet analysis, production factor rewards are determined for 15 agritourism farms. The results show controversial performance but basically highlight the difficulty agritourist farmers have both remunerating their work at market price levels and being profitable. This research contributes to the debate on LFAs and offers useful reflections for policy-makers and practitioners about the potential and critical aspects of agritourism in LFAs.