Assessing farm level viability
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Assessing Farm Level Viability. Andrew Barnes, Shailesh Shrestha, Steven Thomson, Bouda Ahmadi (SRUC Policy Analysis Team). Farm Level Viability. Sustainable development of the industry relies of farms being financially viable

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Assessing Farm Level Viability

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Assessing farm level viability

Assessing Farm Level Viability

Andrew Barnes, Shailesh Shrestha, Steven Thomson, Bouda Ahmadi (SRUC Policy Analysis Team)


Farm level viability

Farm Level Viability

  • Sustainable development of the industry relies of farms being financially viable

  • CAP reform and local policy is informed by derivation of fragility indicators across both biophysical and financial vectors

  • Aim: to identify farm viability over long time period to understand change and drivers of change


Data used

Data Used

  • Farm Account Survey

    • Unbalanced Panel (2000 – 2011)

    • Average of 461 (+/- 23) farms per year

    • Biases involved (Minimal size to entry into the FAS, voluntary, though mostly maintain presence over a number of years).

    • Though dropped farms with less than 3 years continuous entry in order reflect viability over time.


Short term and long term viability

Short term and Long-term Viability

  • Short-Term Viability:Cash Income/hrit≥Min AvWaget

  • Long-Term Viability : Net Farm Income/hrit3 ≥ Min AvWaget3 [three year moving average]


Three states of viability

Three States of Viability (%)


Markov transition probabilities from one state to a different state over time

Markov transition probabilities from one state to a different state over time


Explaining change

Explaining Change

Relative Risk Ratios (RRR) measured against viable group

Note: <1 means more likely to be in viable group

Short-term viable / Long term non-viable


Survival estimates by farm size

Survival estimates by farm size


Survival estimates by lfa status

Survival estimates by LFA status


Further work

Further Work

  • Adjusting ST and LT viability indicators for CAP reform scenarios (build up from FAS data)

  • Inform CAP level modelling work (farm level models)

  • Linking with the Census to regionalise assessments of viability


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