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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 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 • 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 • 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 Viability:Cash Income/hrit≥Min AvWaget • Long-Term Viability : Net Farm Income/hrit3 ≥ Min AvWaget3 [three year moving average]
Markov transition probabilities from one state to a different state over time
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
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