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

Philippe Jeanneaux () and Laurent Piet ()
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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

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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: Farm; Capitalization; Investment; Internal rate of return; Professional assets; Exploitation agricole; Capitalisation; Investissement; Taux de rentabilité interne; Patrimoine professionnel (search for similar items in EconPapers)
Date: 2024-02
Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-04470489v1
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