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Approaches to estimation the farm-level economic viability and sustainability in agriculture: A literature review

Author

Listed:
  • Jindrich Spicka
  • Tomas Hlavsa

    (Institute of Agricultural Economics and Information, Prague, Czech Republic)

  • Katerina Soukupova

    (Institute of Agricultural Economics and Information, Prague, Czech Republic)

  • Marie Stolbova

    (Institute of Agricultural Economics and Information, Prague, Czech Republic)

Abstract

Estimation of farm economic sustainability and viability became more topical when redesigning the Common Agricultural Policy which should stabilise farm income and make agribusiness more viable and sustainable (typically in Czech areas facing natural constraints). The key question is how to calculate the income of farms or farm households not only to survive but also to grow sustainably. 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.

Suggested Citation

  • Jindrich Spicka & Tomas Hlavsa & Katerina Soukupova & Marie Stolbova, 2019. "Approaches to estimation the farm-level economic viability and sustainability in agriculture: A literature review," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 65(6), pages 289-297.
    • Handle: RePEc:caa:jnlage:v:65:y:2019:i:6:id:269-2018-agricecon
    DOI: 10.17221/269/2018-AGRICECON
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    References listed on IDEAS

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    Cited by:

    1. Hasan Arisoy, 2020. "Impact of agricultural supports on competitiveness of agricultural products," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 66(6), pages 286-295.
    2. Vida Dabkiené, 2020. "Off-farm role in stabilizing disposable farm income: A Lithuanian case study," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 66(7), pages 325-334.
    3. Tomas Hlavsa & Jindrich Spicka & Marie Stolbova & Zuzana Hlouskova, 2020. "Statistical analysis of economic viability of farms operating in Czech areas facing natural constraints," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 66(5), pages 193-202.
    4. Katarína Novotná & Ľubomír Gurčík & Zuzana Lušňáková, 2023. "Economic determinants of the development and sustainability of family farms in Slovakia," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 69(7), pages 291-299.
    5. Adele Coppola & Mario Amato & Domenico Vistocco & Fabio Verneau, 2022. "Measuring the economic sustainability of Italian farms using FADN data," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 68(9), pages 327-337.
    6. Ogawa, Keishi & Garrod, Guy & Yagi, Hironori, 2023. "Sustainability strategies and stakeholder management for upland farming," Land Use Policy, Elsevier, vol. 131(C).

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