Farms’ economic resilience: assessment, drivers and policy-making

This study introduces a methodological framework to comprehensively assess farms’ economic resilience capacities (robustness, adaptability, and transformability) based on composite indicators. The proposed approach can be used to determine the potential synergy and trade-off relationships between these capacities and identify the drivers of each one. This approach was empirically tested to assess the economic resilience of farms in the Spanish field crop agricultural system, using microdata from a balanced panel subsample of 947 farms from 2009 to 2021 provided by the Spanish branch of the Farm Accountancy Data Network. The results obtained point to significant heterogeneity in resilience capacities among the farms analyzed, underscoring the multidimensional nature of farm resilience. The Spanish field crop farms also exhibited high static resilience (robustness) but limited dynamic resilience (adaptability and transformability), suggesting a trade-off between maintaining stability and embracing change in the face of disturbances. Robustness indexes indicated that higher decoupled payments and higher shares of owned land positively influence farm stability, whereas higher debt ratios contribute to more volatile economic performance. Adaptability and transformability are enhanced in farms with a higher share of non-land assets and irrigated land, as well as in those that have adopted organic farming. Conversely, farm size, land value, farmers’ age, and the shares of family labor and owned land negatively affect these two capacities. These findings emphasize the need for tailored and targeted policy instruments to foster farms’ all-round economic resilience, accounting for both its static and dynamic components. • A methodological framework to comprehensively assess farms’ resilience capacities. • Spanish field crops system is taken as a case study for farm resilience assessment. • High robustness but low adaptability and transformability in field crop farms. • Need for policies promoting the right balance between stability and flexibility.