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Published: 24 March 2011

Farms' finances boosted by income from outside agriculture

Of one subsidy euro paid to agricultural enterprises in 2009, a farmer family received as taxable result EUR 0.56, on average, in the form of wages and interest on own capital. All sales revenues and the remaining EUR 0.44 of subsidies were used to cover expenses. According to the personal tax data, the combined median of income subject to state tax was EUR 43,300 for a farmer couple, of which the median income of agriculture was only around EUR 7,300. Thus, the share of income from outside agriculture in a farmer family's income is significant. Without external income, in many cases it would be impossible to continue farming. In around 15 per cent of the farms the result from agriculture remained zero, or below it, while in nearly ten per cent of the farms the result was over EUR 50,000. These data derive from the 2009 Statistics on the finances of agricultural and forestry enterprises published by Statistics Finland.

In 2009 the pure capital income of forestry received from private forests amounted to EUR 251 million, which means that the income fell by around EUR 1.1 billion from the peak year of 2007. The reduction was due to both fewer sales of wood and the tax relief applied to wood sales profits in 2008 and 2009.

Farms receiving subsidies to the tune of over EUR 20,000 per year were selected to the panel review. The farms were divided to deciles according to their result and subsidy relation in 2004. Farms remaining until 2009 either in the lowest or highest decile were included in the final panel review.

In 2009 around 65 per cent of the farms belonging to the highest decile were engaged in dairy husbandry as their main production sector and almost 30 per cent in cereal production. In the lowest decile the relation was almost reversed, although the share of dairy farms was there only around eight per cent.

In cereal production farms the workload is usually lower than in livestock farms, so it is easier for owners of cereal farms to seek earnings from outside the farm to boost up the poor result of the farm. Due to the labour-intensiveness of livestock farms, increasing farm size and automatisation are often seen as the only alternatives to improve the financial result. As a result of investments, the result may still remain low for long.

Key figures of the farm enterprises selected to the survey panel based on the result and subsidy relation in 2004 and 2009

		Whole panel, total		Dairy farms		Cereal farms
		Lowest decile	Highest decile	Lowest decile	Highest decile	Lowest decile	Highest decile
Number of farm enterprises	2004	1,101	1,156	124	828	538	80
	2009	1,101	1,156	84	744	615	139
Amount of agricultural subsidies EUR per farm	2004	45,704	36,297	56,245	35,244	39,168	30,242
	2009	49,569	38,659	88,593	40,029	40,044	26,023
Result from agriculture EUR per farm	2004	-4,956	55,201	-5,426	50,396	-2,789	49,033
	2009	-9,106	64,297	-9,617	60,793	-8,019	47,834
Acquisition of fixed assets and expenditure on basic repairs EUR per farm	2004	36,965	18,161	71,301	12,415	29,371	33,958
	2009	30,992	20,588	64,973	12,940	26,012	22,073
Agricultural debts EUR per farm	2004	138,532	40,092	229,474	27,402	101,725	61,903
	2009	174,999	42,221	415,480	21,812	124,907	40,433
Number of farms in the personal tax data	2004	1,014	1,060	115	772	493	74
	2009	1,013	1,054	73	695	572	130
Income subject to state tax EUR per couple	2004	98,649	64,483	37,126	57,997	73,526	65,843
	2009	68,470	75,705	30,313	69,639	77,884	69,703
Earned income and capital income from agriculture EUR per couple	2004	2,063	53,328	1,778	49,392	1,742	46,269
	2009	1,346	61,805	1,795	59,612	955	45,408
Share of agricultural income in income subject to state tax %	2004	2	83	5	85	2	70
	2009	2	82	6	86	1	65
Cultivated arable land ha per farm	2004	60.66	37.46	59.86	34.13	65.09	49.02
	2009	66.62	39.21	82.66	36.70	67.06	42.90

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

Inquiries: Hannu Maliniemi (09) 1734 2796, maataloustilastot@stat.fi

Director in charge: Ari Tyrkkö

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Updated 24.3.2011