Published: 28 April 2009

Debts of farms are growing

Between 2004 and 2007, the debts of agricultural entrepreneurs grew from around EUR 39,000 to EUR 47,000 per agricultural enterprise. Over the same period the taxable assets of agricultural enterprises went up by nearly EUR 12,000 and their income increased by almost EUR 10,000 so “on the average” the situation is under control. However, the risk of indebtedness lies in the fact the debts typically accumulate to just a small number of enterprises. While almost one-half of agricultural enterprises had no debts in 2007, ten per cent of them (around 6,4000 farms) had debts in excess of EUR 134,000 and the debts of five per cent of farms exceeded EUR 220,000. In 2004, the respective limits for debt amounts were EUR 112,000 for ten per cent of farms and EUR 178,000 for five per cent of farms. These data derive from the 2007 Statistics on the finances of agricultural and forestry enterprises published by Statistics Finland.

The development concerning the most indebted agricultural enterprises was studied with a panel time series. Farms whose debts exceeded EUR 200,000 as well as their total income in 2004 were selected to the panel. The panel comprised 2,277 farms meeting these criteria. Enterprises whose debts either diminished by at least 20 per cent (741) or increased by at least 20 per cent between 2004 and 2007 were selected from this population for further examination. The results for these enterprises are presented by production sector in the adjacent table. Detailed data can be found in the database tables of these statistics. In both groups the average debt per enterprise was just over EUR 340,000 in 2004. By 2007, the debt in the group whose debts had increased was around EUR 574,000 while the group that had been paying off debts more than halved its debts in the four years to EUR 168,000. The reason for the differentiation in the development of debts could be the timing of investments, that is, the group that had been paying off its debts had concluded its investment programme but in the other group lively investing had continued throughout the examined period. Enterprises’ profits before deduction of interests were more or less equal in the two groups both at the start and end year of the period, but in the group of the most indebted enterprises risen expenditure on interests ate up almost half of agricultural profits in 2007, so that by the end of the period the indebted enterprises showed a considerably lower net income than the enterprises having paid off their debts. Is over-indebtedness then a threat? A large number of farm enterprises have been able to pay off their debts quickly but a large share of borrowed capital increases the risk for some enterprises. Even minor price changes can prove fatal to an indebted enterprise. Farms whose debts exceeded EUR 200,000 in 2004:

Production line and Change in debts 2004-2007

  Year Production line and Change in debts 2004-2007
  Whole panel 1. Dairy cattle farm 3. Pig farm 6. Cereal farming
Dimin. by over 20% Incr. by over 20% Dimin. by over 20% Incr. by over 20% Dimin. by over 20% Incr. by over 20% Dimin. by over 20% Incr. by over 20%
01 Number of agricultural enterprises 2004 741 524 262 240 114 84 172 71
2007 741 524 238 230 109 81 191 77
03 Income from sales of agricultural products EUR/enterprise 2004 104 575 116 773 113 192 123 704 147 271 145 052 58 449 61 983
2007 122 782 173 063 145 476 170 963 183 998 246 167 64 600 94 679
21 Profit EUR/enterprise 2004 34 457 34 472 39 381 37 955 37 701 32 744 26 897 25 166
2007 49 354 49 845 62 021 55 179 52 363 54 038 36 931 36 514
23 Agricultural interests EUR/enterprise 2004 10 453 11 625 10 054 11 085 10 935 11 719 9 569 12 029
2007 9 310 23 918 8 817 22 911 10 831 26 291 8 532 21 767
24 Net income from agriculture EUR/enterprise 2004 24 299 22 984 29 221 26 545 26 610 21 880 17 880 13 524
2007 39 864 25 399 52 661 31 096 40 798 26 943 28 539 15 914
30.2 Acquisition of fixed assets and expenditure on basic repairs EUR/enterprise 2004 65 182 80 605 82 356 86 415 53 621 71 046 52 885 65 754
2007 36 494 126 584 41 076 131 916 28 315 99 678 32 695 93 132
36 Taxable value of production buildings EUR/enterprise 2004 92 026 88 252 108 395 94 046 121 965 114 712 48 817 33 973
2007 70 466 140 390 85 439 154 218 100 885 167 804 38 102 58 860
38 Taxable value of agricultural machinery and equipment EUR/enterprise 2004 92 174 111 063 103 930 118 228 83 111 103 607 83 501 101 263
2007 77 711 166 280 92 176 180 399 79 165 160 118 67 020 133 069
43 Agricultural debts EUR/enterprise 2004 341 252 344 254 327 336 336 123 382 150 370 077 317 836 316 092
2007 167 748 574 356 171 354 576 951 197 254 630 266 152 249 496 245
44 Arable land under cultivation hectares/enterprise 2004 80,2 85,3 68,0 74,1 69,0 80,6 104,7 122,9
2007 85,3 103,1 75,7 93,1 76,1 94,3 101,8 136,7

Source: Statistics on the finances of agricultural and forestry enterprises, Statistics Finland

Inquiries: Hannu Maliniemi (09) 1734 2796

Director in charge: Ari Tyrkkö


Updated 28.4.2009

Referencing instructions:

Official Statistics of Finland (OSF): Statistics on the finances of agricultural and forestry enterprises [e-publication].
2007. Helsinki: Statistics Finland [referred: 1.11.2014].
Access method: http://tilastokeskus.fi/til/mmtal/2007/mmtal_2007_2009-04-28_tie_001_en.html.

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