An attempt to measure the economic sustainability of farm diversification

The recent CAP has increasingly supported the process of farm diversification throughout a set of measures aimed at enhancing alternative forms of incomes. The paper focuses on evaluating to what extent the diversification strategy enhanced the economic sustainability of different typologies of farms, ranking from micro farms to traditional conventional ones and to the diversified and quality-differentiated farm. The paper analyses the evolution a set of indicators used to assess and compare the performance of these farm typologies over the 2003-09 period. Results show that a certain level of multifunctionality and diversification is actually featured in most farms. The majority of farms in the panel is focused on the strategy of differentiation through quality products, which is key for Italian agriculture performance and competitiveness. Moreover, the indicators of economic sustainability seem to confirm the complementary role of rural development policies to the first pillar of the CAP.