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Farmers' trade-off strategies between investment and private withdrawals, and the profitability of invested capital
[Stratégies d'arbitrage des agriculteurs entre investissement et prélèvements privés, et rentabilité des capitaux investis]

Author

Listed:
  • Philippe Jeanneaux

    (Territoires - Territoires - AgroParisTech - VAS - VetAgro Sup - Institut national d'enseignement supérieur et de recherche en alimentation, santé animale, sciences agronomiques et de l'environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UCA - Université Clermont Auvergne)

  • Laurent Piet

    (SMART - Structures et Marché Agricoles, Ressources et Territoires - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Rennes Angers - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement)

Abstract

Farmers capitalize a significant share of their cash flow in their farm's professional assets. Indeed, the wealth generated on a farm can be allocated either to the immediate remuneration of the non-salaried workers or to the financing of investments, which can be considered as a deferred remuneration to be realized in the future. Based on the analysis of their annual cash flows and assets on their balance sheets, we document how this trade-off is implemented by a FADN sample of 1,374 French commercial farms over the period 2002-2018. It appears that the estimated internal rates of return of the investments are positive in most cases, with an average of 1.7%. We further identify five strategies based on the respective shares of the operating cash flow dedicated to either investments or private withdrawals.

Suggested Citation

  • Philippe Jeanneaux & Laurent Piet, 2024. "Farmers' trade-off strategies between investment and private withdrawals, and the profitability of invested capital [Stratégies d'arbitrage des agriculteurs entre investissement et prélèvements pri," Working Papers hal-04470489, HAL.
    • Handle: RePEc:hal:wpaper:hal-04470489
    Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-04470489
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