Type of indicator

Quantitative

Relative dimension and aggregated criteria

Economic sustainability: Profitability: Farm income

Description

  • Farm net income gives an indication of the capacity to remunerate the farm’s own production factors such as unpaid family labour, capital, and land. It equals farm gross output minus all farm costs (i.e., direct production costs, overhead costs and external costs), minus farm taxes, plus all direct All farming enterprises are taken into consideration.
  • Overhead costs include:
    • Machinery and building costs (e.g., costs of current upkeep of equipment and buildings, costs of land improvements, purchase of minor equipment, car expenses, insurance of buildings);
    • Energy costs (e.g., motor fuels and lubricants, electricity, heating fuels);
    • Expenditure on contract work (e.g., costs linked to work carried out by contractors and to the hire of machinery); and
    • Other costs in the following categories: water, agricultural insurance (except for buildings and accidents at work), accountants’ fees, advisory fees, and telephone charges.
  • External costs include:
    • Wages, social security charges and insurance of wage earners;
    • Rent paid for farmland and buildings and rental charges; and
    • Loan repayments.
  • Subsidies include:
    • Coupled direct payments for crops and livestock;
    • Total support for rural development (e.g., environmental subsidies, subsidies on environmental restrictions, subsidies for less favourite areas (LFA) and areas facing natural or other specific constraints, other rural development payments);
    • Subsidies on direct production costs and overhead costs;
    • Subsidies on external factors; and
    • Subsidies on investments (also known as capital grants).
  • Farm net income is divided by unpaid labour input to represent the ability to pay for unpaid family labour. This figure is likely to play an important role in the decision to continue operating the farm for members of the farming household.

Indicator calculation

[(πΉπ‘Žπ‘Ÿπ‘š π‘”π‘Ÿπ‘œπ‘ π‘  π‘šπ‘Žπ‘Ÿπ‘”π‘–π‘›) βˆ’ (π‘‚π‘£π‘’π‘Ÿβ„Žπ‘’π‘Žπ‘‘ π‘π‘œπ‘ π‘‘π‘ ) βˆ’ (𝐸π‘₯π‘‘π‘’π‘Ÿπ‘›π‘Žπ‘™ π‘π‘œπ‘ π‘‘π‘ )βˆ’(πΉπ‘Žπ‘Ÿπ‘š π‘‘π‘Žπ‘₯𝑒𝑠) + (𝑆𝑒𝑏𝑠𝑖𝑑𝑖𝑒𝑠)] / πΏπ‘Žπ‘π‘œπ‘’π‘Ÿ 𝑒𝑛𝑖𝑑𝑠 π‘œπ‘“ π‘’π‘›π‘π‘Žπ‘–π‘‘ π‘“π‘Žπ‘šπ‘–π‘™π‘¦ π‘šπ‘’π‘šπ‘π‘’π‘Ÿπ‘ 

Unit

€/AWU

Indicator interpretation

Higher values indicate greater ability to remunerate unpaid family labour, as well as other production factors (e.g., land, capital) and thus better economic performance.

Scale definition

Scales Values (€/AWU) Dexi interpretation References
>=75th percentile >= 68182.21 High + Based on the FADN data distribution for EU specialised dairy farms (European Commission, 2022). Quantile method, 2016-2018 data.
[median; 75th percentile] [48507.38; 68182.21] Medium to high
[25th percentile; median] [18103.89; 48507.38] Medium to low
< 25th percentile < 18106.89 Low –