Pasture-Based Livestock Economics under Joint Production of Commodities and Private Amenity Self-Consumption: Testing in Large Nonindustrial Privately Owned <i>Dehesa</i> Case Studies in Andalusia, Spain

Abstract

In this study, we apply the hypothesis of private amenity which simulates that the nonindustrial livestock farmers are assured an ex-ante normal minimum operating profitability rate for their investments in the production systems of livestock species based on grazing in a case study of dehesas in Andalusia, Spain. The ex-post measurement in the Agroforestry Accounting System of the commercial operating opportunity cost incurred by the owners at the close of the period corresponds to the lower limit of the additional amount of noncommercial intermediate product of the private amenity self-consumption service (ISSnca). When the livestock farmers obtain an above-normal operating profitability rate, it is assumed that the absence of opportunity cost results in the free use of the private amenity and, therefore, the latter is a free (noneconomic) service with zero value. In the case study of dehesa farms, the results show that the commercial operating profitability rates at basic prices are below the normal. When the ISSnca is included, the operating profitability rates at social prices for the livestock species exceed by 30%, on average, the assumed normal rate of 3%. However, due to the decline in the prices of the inanimate fixed capital in 2010, the average total profitability rate for the livestock species is estimated at 0.1%, which differs substantially from the assumed normal operating profitability rate. These results are of interest with regard to the design and application of official economic accounts at farm scale, which, as in the European Commission Farm Accounting Data Network, omit the measurement of ISSnca.

Keywords

• Farm Accounting Data Network
• government compensations
• Agroforestry Accounting System
• net value added at social price
• ordinary cash flow