Alternative measures of Family Farm Viability – Incorporating gap measures

Loughrey, Jason; O’Donoghue, Cathal; Conneely, Ricky

doi:10.1016/j.jrurstud.2021.11.022

Cited by 11 publications

(6 citation statements)

References 72 publications

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“…However, the production cycle is shorter in tillage farming and this may lead to rental agreements with a shorter duration. The profitability of dairying has surpassed tillage in the last decade (Loughrey et al 2022 ) and this shift in relative profitability also influences the relative demand from each activity for long-term leases. There appears to be an increase in the importance of contractualization for dairy farming in Ireland.…”

Section: Introductionmentioning

confidence: 99%

Understanding agricultural land leasing in Ireland: a transaction cost approach

et al. 2023

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Formal written land leasing contracts offer an alternative to land purchase for those farmers wishing to expand their land area and provide greater security relative to informal short-term rental agreements and are particularly important for beginning farmers with resources insufficient to purchase land. Formal land leasing contracts vary in terms of their duration, but there is limited understanding about the determinants of contract duration in developed countries. In this research, we use econometric techniques and transaction level data to explore the determinants of duration for agricultural land lease contracts for two regions in Ireland. Under the transaction cost economics approach, the research explores the role of legal status, price and non-price conditions in influencing the contract duration. Results indicate that the legal status of the tenant is a significant factor in influencing the duration. Provisions such as break clauses appear positively related to duration and confirm the theoretical expectation that long-term contracts create a demand for processes that enable adaptation over the course of long-term exchange.

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Section: Introductionmentioning

confidence: 99%

Understanding agricultural land leasing in Ireland: a transaction cost approach

et al. 2023

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“…The FPI and CII are strongly interrelated but refer to different aspects that define the farm's viability and focus on the use of the household's resources or living standards (Loughrey et al 2022).…”

Section: Methodsmentioning

confidence: 99%

Measuring the economic sustainability of Italian farms using FADN data

Coppola¹,

Amato²,

Vistocco³

et al. 2022

Agric. Econ. - Czech

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In recent literature, the issue of sustainability and its measure has been addressed with different approaches that depend on the multidimensional nature of the concept and the specific sector and context to which it applies. The present work focuses on the economic sustainability component and suggests an operative measure at the farm level. The measure of economic sustainability has been applied to Italian family farms using Farm Accountancy Data Network (FADN). Based on this data, an efficiency indicator (EI) and two income indicators [a factor profitability indicator (FPI) and a comparable income indicator (CII)] expressing the ability to remunerate the entrepreneur's production factors at their opportunity cost and the farm's income capacity have been used in a principal component analysis (PCA) to build an economic sustainability index (SI). The index was used to describe Italian farms' economic sustainability levels but was also the cue to discuss problems related to identifying economic sustainability thresholds and the trade-off between efficiency and income components.

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“…Although farm income support has always been an objective of the CAP, the EU has never specified what should be understood as a “viable” income (Hill & Bradley, 2015). This lack of specificity means there is no normative reference level with which to compare the income actually obtained by farms, leading to multiple academic debates about the concept of farm viability, as evidenced by O'Donoghue et al (2016) and Loughrey et al (2022). However, most authors (e.g., Argilés, 2001; Coppola et al, 2022; Spicka et al, 2019; Vrolijk et al, 2010) conceptualize this term as the farms' capacity to generate sufficient income to cover all fixed and variable costs, as well as to remunerate the factors of production provided by the farmer.…”

Section: Research Backgroundmentioning

confidence: 99%

Profit and viability persistence: Evidence from the Spanish agricultural sector

et al. 2023

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The literature focused on analyzing profit persistence in the agricultural sector is scarce. This paper contributes to reducing this gap by carrying out an empirical study of 10 types of farming in Spain based on a dynamic panel model with microeconomic data from a large sample of farms provided by the Spanish Farm Accountancy Data Network. The generalized method of moments system estimator is used to assess profit persistence, including all significant lagged profit rates explaining the adjustment of abnormal profits over time. Moreover, the dynamic of farms' economic performance is analyzed considering the return on assets as a dependent variable (i.e., measuring farms' profitability), as well as an alternative indicator that also accounts for opportunity costs (i.e., measuring farms' viability). The results show that profit and viability persistence in the farming sector are complex dynamic processes that depend on several lags of the aforementioned dependent variables (between 2 and 5 years), with high abnormal profit and viability persistence being widespread. In any case, heterogeneous persistence results are achieved depending on the type of farming. The differences found can be explained by disparities in several explanatory variables contributing to above‐ or below‐average performance. The conclusions reached could lead to sounder decision‐making regarding agricultural policy (i.e., farm subsidies) and competition policy (i.e., exceptions to competition law). [EconLit Citations: D41; L13; L22; L25; Q12; C23].

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Alternative measures of Family Farm Viability – Incorporating gap measures

Cited by 11 publications

References 72 publications

Understanding agricultural land leasing in Ireland: a transaction cost approach

Understanding agricultural land leasing in Ireland: a transaction cost approach

Measuring the economic sustainability of Italian farms using FADN data

Profit and viability persistence: Evidence from the Spanish agricultural sector

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