Economic situation and concentration of arable crop partnerships in Hungary

Abstract

The objective of this study is to evaluate the concentration and economic situation of Hungarian arable crop partnerships. Financial data of 853 Hungarian arable crop partnerships between 2015 and 2019 were used from the database of Emerging Market Information System (EMIS). The examined partnerships varied in farm size, in the sample with the largest proportion being micro-partnerships. Around 15% of the partnerships account for almost half of the total assets and net sales revenue of the sample and the concentration can be considered medium according to the Gini index, with a slight increase only in net sales revenue concentration from 2015 to 2019. According to the Return on Sales (ROS, 8.6%) and Return on Assets (ROA, 4.7%) indicators, the examined farms are profitable. In terms of fixed asset ratios, about half of the Hungarian arable farms have ratios between 40% and 60% and one third have ratios below 40%, indicating more outdated and obsolete assets. In addition, Hungarian arable farms have an average leverage ratio of 28%, meaning the farms financed most of their expenditure from their own resources. In terms of liquidity, almost 50% of the examined partnerships had excellent (2<=) short-term liquidity, while about 30% had unfavourable (<1) short-term liquidity.

Keywords

• arable crop production
• financial indicators
• efficiency
• farm size
• concentration