Sizes of farmland necessary for earning minimum income and investment required for farms of various specializations in Latvia
2015
Nipers, A., Latvia Univ. of Agriculture, Jelgava (Latvia) | Pilvere, I., Latvia Univ. of Agriculture, Jelgava (Latvia) | Krievina, A., Latvian State Inst. of Agrarian Economics, Riga (Latvia)
The aim of the research is to evaluate the required investments, taking into account the sizes of farmland necessary for earning a minimum income in the context of different farm specialization. Most agricultural sectors need agricultural land to earn revenues. A farmland area needed to provide a certain income depends on the farm specializations. The present research assumes that the individuals employed on agricultural holdings seek to earn an income equivalent to at least the average income earned by employed individuals in the country. The average income may be earned exploiting a certain agricultural land area. Using a specially developed methodology, the sizes of land area for providing a minimum income level on farms of various specializations in Latvia were identified. To earn an income equivalent to the average income earned by employed individuals in Latvia, on average, 65.5 ha in field crop farming, 48.3 ha in dairy farming and 53.7 ha in grazing livestock farming are needed per individual, while per two individuals 108.9 ha in field crop farming, 84.4 ha in dairy farming and 100.8 ha in grazing livestock farming are necessary. In Latvia, in the sectors of field crop, dairy and grazing livestock farming, more than 90 % of the total number of farms belongs to a group of farms exploiting an area being less than the area needed for ensuring a minimum income. In order to that a land area needed to provide a minimum income is exploited, farms have to make long-term investments in farm buildings, machinery, equipment and other fixed assets. The size of long-term investment (investment in land excluded) varies from 532 EUR•haE-1 for dairy farming to 1 110 EUR•haE-1 for field crop farms, which requires to make a long-term investment of from approximately 26 000 EUR for dairy farms up to about 73 000 EUR for field crop farms.
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