The Role of the Start-Up Aid for Young Farmers in the Adoption of Innovative Agricultural Activities: The Case of Aloe Vera

Abstract

The poor generational renewal has been identified as a key issue for the EU policy that undermines the restructuring of the agricultural sector and the revitalisation of rural areas. The start-up aid for young farmers is one of the main EU-driven policy measures that try to mitigate this trend, by facilitating the initial investment of young newcomers in agriculture. At the same time, innovative crops with appealing characteristics are proposed as promising alternatives with high socioeconomic and low environmental impacts. Recently, a draft new call of the start-up aid for young farmers measure has been set under public consultation in Greece, which significantly alters the requirements and the level of support of the beneficiaries, compared to the previous one. The aim of this study is to explore the consequences of this change to the desirability to invest in the organic aloe vera crop, one of the leading innovating crops in Greece. In this study, taking into consideration the embedded risk and uncertainty, we utilise a stochastic version of the Net Present Value (NPV) analysis, a common discount cash flows method to detect the desirability of an investment. Results indicate that the potential alteration of the start-up aid for young farmers deteriorates the desirability of this investment and thus prevents farmers from its adoption. The analysis provides useful insights by highlighting risk factors and the possible impacts of policy measures on the desirability of innovative crops; thus, it can be useful both for investors and policymakers.

Keywords

• aloe vera
• net present value
• stochastic analysis
• risk and uncertainty
• start-up aid for young farmers
• young farmer problem