Estimation of the role of diversification on farm effectiveness by means of modelling. An application to Bulgarian district of Stara Zagora.

This paper estimates the effect of diversification on farm effectiveness through modelling using data from the National Statistical Institute of Bulgaria. The estimation of the role of diversification in agriculture is similar to this in corporate firms. The results show that the number of diversification activities has a significant effect on the final economic results. The introduction of the factor of lifetime of the firms with its effect on size of revenues from diversification activities is a new feature in this study. The above mentioned provides an opportunity for adaptation and effective operation of the business in the variable market environment, as well as a useful referent for public responsibles in order to design adequate supporting programmes. On the other hand, this paper refines Berger and Ofek’s methodology by adapting it to the conditions of the agricultural production in Bulgaria. Main differences are related to the selection of the considered factors and the final economic result. The latter is extra revenue from diversification activities and the selected representative sample of firms is grouped by the criteria of number of diversification activities. [ABSTRACT FROM AUTHOR]