What is it about?
Why do some agricultural businesses stop operating while others survive financial difficulties? This study examines financial records from 438 Spanish crop-agriculture firms between 2014 and 2024, including 97 business discontinuation events. We investigate whether business closure is associated with a single year of poor profitability or with broader patterns of financial weakness. The results show that weak cash-flow generation and limited tangible assets are more informative warning signs than an isolated year of negative profits. Repeated profitability problems also matter, particularly as businesses approach discontinuation.
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Why is it important?
Agricultural business closures can affect employment, rural economies, and local production systems. This research identifies financial indicators that may help banks, agricultural advisers, and policymakers recognize vulnerable firms earlier. However, these indicators are better suited to preliminary risk assessment than definitive predictions of closure, allowing financial support and monitoring to be targeted more carefully.
Perspectives
A business does not necessarily stop operating because of one bad financial year. Our findings suggest that financial vulnerability is a broader process involving cash generation, asset structure, and persistent weakness. Understanding these patterns is important for developing more realistic approaches to agricultural business survival and rural economic resilience.
Phd. Ricardo Teruel-Gutiérrez
Universidad Politecnica de Cartagena
Read the Original
This page is a summary of: From financial fragility to business discontinuation in crop agriculture: evidence from Spanish firm-level data, Agricultural Finance Review, October 2026, Emerald,
DOI: 10.1108/afr-04-2026-0101.
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