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The Relationship between Farm Succession and Farm Assets on Belgian Farms
Author(s) -
Calus Mieke,
Van Huylenbroeck Guido,
Van Lierde Dirk
Publication year - 2008
Publication title -
sociologia ruralis
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.005
H-Index - 84
eISSN - 1467-9523
pISSN - 0038-0199
DOI - 10.1111/j.1467-9523.2008.00448.x
Subject(s) - family farm , successor cardinal , asset (computer security) , bottleneck , business , value (mathematics) , agricultural science , database transaction , ecological succession , economics , agricultural economics , agriculture , operations management , mathematics , geography , statistics , mathematical analysis , ecology , environmental science , computer security , archaeology , computer science , programming language , biology
A major bottleneck in the farm life cycle is intergenerational farm transfer. At the end of the farm life cycle only a limited number of family farms is transferred to the next generation. The average economic farm size increases and this can entail a high financial burden for the successor. This article explores total farm assets as a potential tool to identify farms with a higher probability of transfer. The theory of asset fixity and transaction cost theory are used to explain why higher total farm assets should result in a higher intention to transfer the farm to the next generation, independent of farm type. Empirical results support this theory and show that lower total farm assets often result in farm discontinuation because the total farm value approaches the value of liquidation. Furthermore, our results show that farmers anticipate farm succession possibilities by adapting their farm management. The proposed indicator could therefore be a useful tool for targeting succession or retirement policies.