Diversification has been increasingly recognized as a rewarding farm strategy through which farmers produce on-farm non-agricultural goods and services. In doing so, farmers employ farm inputs (capital, labor, and land) in products other than agricultural goods, with the aim to sell them in the market and increase their income. While a significant body of literature has explored the drivers affecting the adoption of diversification activities, so far little attention has been given to the impact of such adoption on the technical and financial performance of farms. This article intends to provide empirical evidence on the impact of on-farm non-agricultural diversification on the financial performance of family farms in Italy, by using a nation-wide sample of agricultural holdings based on the Farm Accountancy Data Network (FADN) data. We estimated a fixed effects-instrumental variable panel model to deal with two potential sources of bias: self-selection in the diversification strategy and simultaneity, due to the fact that farmers often decide to diversify with outcome expectations in mind. Our findings show that in Italy the diversification strategy has a positive impact on the financial performance of family farms, which is second in magnitude only to that of land growth strategy. Our results also confirm the positive impact of efficiency and clarify that education has a positive return to investment when it is specialized in agriculture.

The article focuses on the role of Localized Agri-food Systems (LAFS) in the provision of environmental and social benefits (ESBs) in peripheral areas, by comparing two case studies in Italy: bergamot production in Grecanic area (Calabria region) and a basket of local products in Garfagnana area (Tuscany region). On the basis of the evidence collected through semi-structured interviews with key stakeholders, the paper shows the different mechanisms by which LAFS may stimulate the provision of ESBs in such areas. In both case studies the provision of ESBs was the result of the interplay among three different types of drivers: markets factors, the set of policies implemented in the specific territorial context and collective actions performed by local actors to promote new governance patterns and new institutions. The article shows that in peripheral areas LAFS, alongside food production, have a strong potential in delivering a broad range of environmental and social benefits, which are highly valued by local communities and consumers. However, this potential varies to large extent according to the socio-economic and institutional settings, as well as on the type of interactions of market drivers with public policies and collective action.

At the EU level, agricultural and rural development policies are increasingly oriented and targeted to the provision of public goods associated with farming. While most analysis focuses on the efficiency and effectiveness of specific types of interventions, this paper aims at exploring the role of policy mixes in stimulating the provision of environmental and social benefits (ESBs) associated with agriculture. The role of policy mixes in determining the provision of ESBs to farming is a complex matter, since different types of policies may have synergistic, overlapping and/or contrasting effects. On the basis of a comparative analysis of six case studies in different European countries, the analysis shows interesting solutions already being experimented with in the field by local actors working together through some form of cooperative action, highlighting how public intervention is often a combination of different policy instruments that may vary according to the type of socio-economic and institutional settings as well as according to the type of ESB targeted. The effectiveness of policy mixes depends not only on the design and implementation phases, but also on new governance arrangements stimulating alternative mechanisms of public goods provision, including market mechanisms and collective action.