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Long-term Economic Viability and Farm Succession -- Theory to Practice

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  • Bernhardt, Kevin

Abstract

Farm succession to the next generation is fraught with challenges, not the least of which is the economic viability of the operation. The next generation has choices of where to employ their manual labor, management skills, and equity capital. If the farm business does not pay the same as some alternative, then their return to the farm comes at a sacrifice, which is a tough ask of someone at the beginning of their careers.
This paper uses past work to define long-term economic viability, and presents a process for on-farm measurement, assessment, and improvement of current viability. A database of 174 Wisconsin dairy farms from the years 2014-2018 is used to illustrate the process. Not surprisingly, farms with the highest return on assets had the strongest viability. Deeper analysis revealed that farms who used debt-financing to achieve greater returns than the interest paid resulted in stronger economic viability.

Suggested Citation

  • Bernhardt, Kevin, 2024. "Long-term Economic Viability and Farm Succession -- Theory to Practice," 24th Congress, Saskatoon, Canada, 2024 400138, International Farm Management Association.
    • Handle: RePEc:ags:ifma24:400138
    DOI: 10.22004/ag.econ.400138
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