Browsing by Subject "bookkeeping farms"

The aim of this study was to examine the economic development of Finnish bookkeeping dairy farms from the point of view of investment impacts. The study was made in co-operation with the Central Union of Agricultural Producers and Forest Owners (MTK) Standard Cow House-project. The milk production environment and the reasons for investment needs were described as a back-ground of the study. This study also described the most essential determinants currently involved to investments, such as the current agricultural policies, investment and production control, the cost of investing and the uncertainty for incomes in the future. The country quota for milk production has been increased in recent years and the quota system will be completely abolished in April 2015. Literature survey showed that maintaining current produc-tion level in Finland will require a large number of investments in the near future, but the increasing investment costs, product- and input price volatility and uncertainty about future agriculture policy responses makes it challenging for farmers to develop their production. Empirical data included accounting, production and labor information of years 2000-2010 from 151 dairy farms. In the first part of the empirical study farms were divided into groups based on the in-vestment ratio. Economical development was surveyed with financial indicators and groups were compared with Kruskal-Wallis one-way ANOVA test. In the second part of the study, farms which had invested more than 300 000 € to a cattle building during years 2005-2007 were studied more closely. The study found that a higher rate of investment had some positive effects on economic success in the long run. Higher investment rate had a positive effect on livestock-work productivity and the return on capital. A closer look to cattle-building investments revealed that financing the investment makes liquidity tight, but solvency is maintained at a healthy level. A sharp increase in the number of working hours were found as well as loss in the average milk yield during the investment process and even after it. These factors caused adjustment costs and it took 2-3 year period before the real- and monetary process recovered to the level before the investment.