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Analysis of the structure of production over profitability and risk of farms

Author

Listed:
  • Daniel Kopta

    () (University of South Bohemia in České Budějovice)

  • Martin Maršík

    () (University of South Bohemia in České Budějovice)

Abstract

In the present article there are presented results of the analysis of the impact of production structure of profitability and risk of farms. The production structure was given by proportion of fundamentals crops on total income from agricultural production. The first part of the analysis concerns the impact of the pattern of the overall profitability. For the viability criteria is taken the accumulated amount of profit for five years of management relative of original value of assets. The investigation did not show that specialization in any of the monitored commodities significantly affect the profitability achieved. The only exception is the production of milk. Undertakings aimed at this commodity shows demonstrably lower profitability. Another part of the work addresses potential threats to farms. Previous investigation already showed, that the farms are threatened both - the normal negative profitability - second, violent fluctuations in cash flow (an otherwise positive long-term profitability), leading to temporary loss of margin. In comparing these two categories of threat, defined in this way show, that the lack of profitability of firms at risk are closely focused on livestock production, especially dairy. The investigations do not result significant differences in profitability of production of this commodity for individual categories of enterprises. Crop production is concentrated on the planting of winter barley and potatoes. Return on sales of those commodities is positive, though i tis below the sectoral average. The resulting loss is particularly due to promoting the production of loss-making milk. Business at risk of cash flow fluctuations are focused on plant production. Main sales volume provides production of wheat and rape. Long-term profitability of these enterprises is even above the sectoral average. Enterprises are threatened by violent fluctuations in the profitability of the dominant commodities. The contribution is part of the research project MSM 6007665806.

Suggested Citation

  • Daniel Kopta & Martin Maršík, 2009. "Analysis of the structure of production over profitability and risk of farms," Acta Universitatis Bohemiae Meridionales, University of South Bohemia in Ceske Budejovice, vol. 12(2), pages 93-98.
  • Handle: RePEc:boh:actaub:v:12:y:2009:i:2:p:93-98
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