Article

Financial management practices and farm profitability

Agricultural Finance Review 10/2003; 63(2):157-174. DOI: 10.1108/00215060380001147

ABSTRACT The adoption of several basic financial management practices is examined for a group of New York dairy farms. The study provides estimates of the extent to which various business analysis and control, investment analysis and decision making, and capital acquisition practices have been adopted. Many practices, such as net present value analysis, are not widely adopted by farmers. The relationship between the adoption of financial management practices and farm profitability is also examined. Results suggest that the adoption of financial management practices, such as using investment analysis techniques, significantly impacts farm financial performance.

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    • "Pożytki z wysokich umiejętności zarządzania finansowego mogą być bardzo duże, o czym przekonują m.in. badania amerykańskie (Gloy, LaDue 2003). Wynika z nich, że stosowanie sformalizowanych narzędzi oceny inwestycji pozwoliło zwiększyć rentowność aktywów aż o 6,4 pkt proc. "
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    ABSTRACT: The main objective of this article is to present the prin- cipal features and conditions of pursuing financial po- licy in Polish agriculture after it was covered by the mechanisms of the Common Agricultural Policy. Sub- sequently, the article identifies the current and mid-term challenges standing before this policy and presents the possible scenarios, as well as their implications both for the agricultural sector and the whole national economy.
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    • "Both were associated with higher return on assets. However, Gloy and LaDue (2003) found no evidence to support an association between return on assets and the use of either benchmarking or trend analysis. Thus the evidence from this study is also mixed. "
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    ABSTRACT: This paper reports on a study aimed at identifying financial management practices important in explaining farmer satisfaction with their business performance in the dairy farming industry in the state of New South Wales (NSW), Australia. Principal components analysis was performed on survey data from 204 NSW dairy farming businesses measuring the extent to which a wide variety of financial management practices were undertaken. This analysis identified five financial management dimensions: appraisal practices, environmental accounting, budgeting, aid use and analysis practices. Regression analysis, including control variables, indicated that greater emphasis on financial management was associated with greater satisfaction with business performance. Appraisal practices, including calculating the payback period for investments and assessing the relevant costs and benefits of decision alternatives, were found to be particularly important in explaining satisfaction. The emerging techniques of environmental accounting were also found to have a unique relationship with farmer satisfaction. The findings provide further support for prescriptions in the literature that farmers should invest time and effort into financial management.
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    ABSTRACT: PROBLEM STATEMENT A high degree of integration of the Republic of Armenia into the Soviet economy induced economic collapse during the transition period. In result over 330,000 farms emerged and the share of Armenian agriculture in GDP increased up to 40%. There are many problems in agriculture such as the lack of suitable machinery and equipment, water for irrigation, knowledge of good farming practices. In our opinion the most formidable one is the sales problem of farm products, in part because after losing the traditional state procurement channels small farms are handling products on their own. The problem is reinforced by the farmers low bargaining power.
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