Reasons for developing or exiting business in the primary sector - A study of milk farmers in central-west Sweden

The aim of this research was to study empirically what characterize farms and farmers that choose to develop the milk production at their farms. The background was that several farms have exited milk production, which threatens both goals about rural development and also the activities of the dairies. Based on survey data from 313 milk producing farms in central-west Sweden and structural equation analysis, it was concluded that farms that are accustomed to changes will develop their milk production further. The results also showed that farms which are more dependent on their milk production are more likely to develop their milk production. Furthermore, it was indicated that satisfactory supply of qualified labour stimulates development of milk production, as do location of the farm at a longer distance from common facilities. The results also showed that the farmers who develop their farms have more positive expectations about profitability in milk production and are also less risk averse. Finally, the results indicated that information through trade magazines and similar oneway communication channels are used by those who develop their milk production and that farmers who develop their milk production are those who take actions to evaluate their strategic decisions more seriously.