Farmers' trade-off strategies between investment and private withdrawals, and the profitability of invested capital

Philippe Jeanneaux and Laurent Piet

No 339873, Working Papers from Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2)

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.

Keywords: Agricultural Finance; Farm Management; Production Economics (search for similar items in EconPapers)
Pages: 19 p.
Date: 2024-02-21
New Economics Papers: this item is included in nep-agr
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Persistent link: https://EconPapers.repec.org/RePEc:ags:inrasl:339873

DOI: 10.22004/ag.econ.339873

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