Spatial Analysis of Factors Affecting Finnish Farmland Prices

The purpose of the study was to find out the factors affecting farmland prices in Finland. A hedonic pricing model that takes into account the presence of spatial dependence was applied for a very large sales price data (6 281 observations). The results confirmed the importance of land quality and the structural change as determinants of land price. In addition, off-farm job possibilities seemed to have a significant role in determining land prices. The effect of government payments on land prices was also clear, even though the support does not explain very much of the differences in land prices between regions.land prices, hedonic pricing, spatial econometrics, Land Economics/Use, Q11,

Profitability of and Reasons for Adopting Automatic Milking Systems

Adopting an automatic milking system (AMS) on a dairy farm decreases the hours spent on animal husbandry by approximately 30 per cent. When comparing a milking parlour and the AM-system, the main economic benefit clearly results from the decrease in labour costs in automatic milking. In terms of economic profitability, the net profit in AM-system remains above that of the milking parlour system. On dairy farms the main reasons for adopting automatic milking are linked to the workload and physical loading. A more flexible working time distributes the workload evenly during busy cultivation periods. More flexible leisure time is also important. Producers also want to enhance the welfare and health of the animals by increasing the milking frequency of highly productive cows.automatic milking system, profitability, labour costs, Livestock Production/Industries, Q12, Q16,

Financial risks and factors affecting them on Finnish farms

As a consequence of rapid structural change and new investment support scheme agricultural debts have increased and concentrated heavily in Finland. In addition, New Basel Accord (Basel II) regulating the bank business requires more in-depth credit risk assessment from banks. Therefore, there are both endogenous and exogenous reasoning for researching the agricultural credit risks. The purpose of the study is to find out the factors that affect financial risks in agriculture as well as possible change in credit risks. Credit scores depicting the magnitude of financial risk for 664 Finnish FADN farms are calculated and an econometric model is applied to clarify which farm specific factors influence the credit score. According to the study increasing farm size decreases financial risks. Furthermore, higher yields that also reflect higher professional skills of the farmer decreases financial risks. In contrast, increasing debts also increase credit risks. In addition, cereal farms tend to have higher credit risks than animal farms. The latter is due to negative profitability development as a consequence of deteriorated grain prices. Even though credit risks in general have increased the number of farms facing substantial financial problems has not increased. However, given the perpetual economic development and structural change in Finnish farming industry the agricultural credit risks will increase. Hence, the lenders would be condemned to apply stricter criteria when granting loans and debt will not be granted to some smaller farms.Credit risks, financing, Agricultural Finance,

Spatial Analysis of Factors Affecting Finnish Farmland Prices

The purpose of the study was to find out the factors affecting farmland prices in Finland. A hedonic pricing model that takes into account the presence of spatial dependence was applied for a very large sales price data (6 281 observations). The results confirmed the importance of land quality and the structural change as determinants of land price. In addition, off-farm job possibilities seemed to have a significant role in determining land prices. The effect of government payments on land prices was also clear, even though the support does not explain very much of the differences in land prices between regions

Profitability of and Reasons for Adopting Automatic Milking Systems

Adopting an automatic milking system (AMS) on a dairy farm decreases the hours spent on animal husbandry by approximately 30 per cent. When comparing a milking parlour and the AM-system, the main economic benefit clearly results from the decrease in labour costs in automatic milking. In terms of economic profitability, the net profit in AM-system remains above that of the milking parlour system. On dairy farms the main reasons for adopting automatic milking are linked to the workload and physical loading. A more flexible working time distributes the workload evenly during busy cultivation periods. More flexible leisure time is also important. Producers also want to enhance the welfare and health of the animals by increasing the milking frequency of highly productive cows

Vertical price formation in the Finnish food chain

In this paper we analyse, how food prices have been spread between different actors in the Finnish food chain in 2000-2007. In addition, we compare price formation in Finland to eight other countries. We argue that the main factors explaining different food price behaviour between different countries especially in Europe are; the level of processing in the consumed food products, domestic competition, availability of substitute products, domestic consumption structure and consumers’ preferences. Our results show, that retailers’ share of food prices has increased in Finland, while both the farmers’ and processors’ share has been decreasing. This development differs significantly between countries. Yet, it seems that the lack of competition gives retail sector a significant advantage in the food chain, especially when food processors are facing increased competition on from imports

Financial risks and factors affecting them on Finnish farms

As a consequence of rapid structural change and new investment support scheme agricultural debts have increased and concentrated heavily in Finland. In addition, New Basel Accord (Basel II) regulating the bank business requires more in-depth credit risk assessment from banks. Therefore, there are both endogenous and exogenous reasoning for researching the agricultural credit risks. The purpose of the study is to find out the factors that affect financial risks in agriculture as well as possible change in credit risks. Credit scores depicting the magnitude of financial risk for 664 Finnish FADN farms are calculated and an econometric model is applied to clarify which farm specific factors influence the credit score. According to the study increasing farm size decreases financial risks. Furthermore, higher yields that also reflect higher professional skills of the farmer decreases financial risks. In contrast, increasing debts also increase credit risks. In addition, cereal farms tend to have higher credit risks than animal farms. The latter is due to negative profitability development as a consequence of deteriorated grain prices. Even though credit risks in general have increased the number of farms facing substantial financial problems has not increased. However, given the perpetual economic development and structural change in Finnish farming industry the agricultural credit risks will increase. Hence, the lenders would be condemned to apply stricter criteria when granting loans and debt will not be granted to some smaller farms

Vertical price formation in the Finnish food chain

In this paper we analyse, how food prices have been spread between different actors in the Finnish food chain in 2000-2007. In addition, we compare price formation in Finland to eight other countries. We argue that the main factors explaining different food price behaviour between different countries especially in Europe are; the level of processing in the consumed food products, domestic competition, availability of substitute products, domestic consumption structure and consumers’ preferences. Our results show, that retailers’ share of food prices has increased in Finland, while both the farmers’ and processors’ share has been decreasing. This development differs significantly between countries. Yet, it seems that the lack of competition gives retail sector a significant advantage in the food chain, especially when food processors are facing increased competition on from imports.food chain, price formation, Finland, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety,