What is it about?
The paper compares selected approaches of estimation of farm viability and sustainability in agriculture. It is a literature review, so it summarizes various approaches defined and used by various authors. There are stressed advantages and disadvantages of selected approaches considering their use for possible assessment of viability of farms operating in the areas facing natural constraints (ANC) in the Czech Republic.
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Why is it important?
The article summarises and compares knowledge from 51 studies to provide a comprehensive discussion on different ways how to measure economic viability and sustainability to set income support for farms in the areas with natural constraints optimally. The authors found family farms and off-farm income as important limitations of FADN database (Farm Accountancy Data Network) for evaluation of the economic sustainability of farm household. Moreover, some financial ratios (Return on Assets – ROA and assets turnover) are not suitable viability indicators for farms with a high share of hired land (typically large legal entities). Joining family farms and legal entities, the authors recommend using modified Farm Net Value Added (MFNVA) allowing for opportunity costs of own land and non-land assets. The average wage in the economy or region is a better proxy for opportunity labour costs of unpaid work rather than average agricultural wage.
Perspectives
The literature review will contribute to a more detailed analysis of the viability and sustainability of farms in less favourable areas in the Czech Republic. Scores representing a multidimensional view on viability and sustainability will be based on the comprehensive analysis of individually selected indicators. At the same time, suitable predictors of viability will be identified and used for policy modelling of the ANC regions.
Dr Jindřich Špička
University of Economics, Prague
Read the Original
This page is a summary of: Approaches to estimation the farm-level economic viability and sustainability in agriculture: A literature review, Agricultural Economics (Zemědělská ekonomika), June 2019, Czech Academy of Agricultural Sciences,
DOI: 10.17221/269/2018-agricecon.
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