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Valuation of a farm at current market value is a crucial part of the process of farm transfer, be it between family members through inheritance or on the open market between buyers and sellers. This article explains the methods available to and used by professionals in France to value farms, and presents results of an application of the methods on bookkeeping data for French representative commercial farms.

The literature is rich on business valuation methods but less so in the farming context. Some assets are often very specific (farm buildings, livestock, agricultural land) and the activities of farms are by nature diverse and risky, making it difficult to standardise their valuation. There are two broad categories of methods. Economic methods are based on cash flows and profitability generated by the assets and include the fundamental and financial methods. The fundamental (or discounted cash-flows or long-term returns or capitalisation) method consists of valuing the farm as an industrial project that will generate cash flows in the future, over a chosen time horizon, for example the duration of a long-term rental agreement (nine years in France). The farm value is thus the sum of the future net cash flows discounted at an appropriate rate. The financial (or profitability) method is based on the estimation of the farm investors’ potential remuneration, which can be approximated by the farm net profit (farm income from which the farm manager's labour remuneration has been subtracted).

The second category of methods relies on the separately-valued assets mainly with the patrimonial method (or liquidation and accounting valuation method). Each tangible asset is estimated separately, with the current market value or with the book value of assets available in the balance sheet. While the fundamental method is generally preferred by buyers (that is to say, future farmers) and banks, sellers favour the patrimonial method as it generates high values. In practice both sets of methods are often used in combination.

In 2021 an online survey was conducted of 67 land experts and farm accountants in France who regularly estimate farm values for farmers (both sellers or buyers) (Enjolras et al., 2023). As shown in Figure 1, the highest share of experts (56 per cent) used the patrimonial method, although the fundamental and financial methods together account for a comparable share of experts (53 per cent). The survey also highlighted the difficult conciliation of perspectives between sellers and buyers and the need to consider intangible factors, as seen in Figure 2.

The different methods were applied to the 2017 and 2018 French Farm Accountancy Data Network (FADN) bookkeeping data (Jeanneaux et al., 2022). Figure 3 shows that wine-growing farms have the highest values on average. Pig and beef cattle farms have high average patrimonial values, reflecting their high capita

Extending strategic planning to the full range of Common Agricultural Policy (CAP) interventions could improve the impacts of this controversial public policy. Science, particularly agricultural economics, can play a role in improving the quality of planning and implementation of a reformed CAP. The preparation of Member States' Strategic Plans (SP) is rather formalistic, while the plans are not very rigorously designed. A major weakness is related to the CAP's political-economic characteristics and lies in the selection and definition of interventions: financially strong but poorly targeted interventions tend to be pre-fixed, which prevents a stronger focus on the results and quality of planning. The intervention logic functions as a black box, as the links between policy priorities and interventions are merely implied, with no clear, evidence-based links. Therefore, European decision makers should re-examine the concept of CAP SP and especially improve a support system and capacity building for SP designers. Greater involvement of academic research and scientific methods and tools in the preparation, monitoring and evaluation of plans, could significantly improve the quality of planning. This would require increased investment in research and dialogue among representatives of academia, government and the nongovernmental sector.

Total support to the agricultural sector arising from public policies reached a record USD 817 billion per year in 2019–2021 for the 54 countries¹ covered in the OECD Agricultural Policy Monitoring and Evaluation 2022 report (Figure 1). However, only a small share of this support was directed at longer-term efforts to combat climate change and other food system challenges.

Of the total support, USD 500 billion per year was paid by taxpayers from public budgets, with the remaining USD 317 billion per year being transferred by consumers through higher prices (market price support). In a small number of countries, policies also suppress prices for some or all commodities, generating a transfer (an implicit tax) of USD 117 billion away from agricultural producers. In total, USD 391 billion per year was transferred to producers in the potentially most distorting forms of support (market price support and payments based on output or the unconstrained use of variable inputs).

Along with forestry and other land use, agricultre represents around 22 per cent of anthropogenic GHG emissions; mainly methane and nitrous oxide from livestock, rice cultivation and fertiliser use, and carbon dioxide emissions through land use change, such as deforestation and carbon losses in agricultural soils. Lower GHG emissions can result from increasing productivity and efficiency in input use, adopting production techniques that reduce emissions, increasing soil carbon sequestration, afforestation and restoration of degraded lands, reducing food losses in the field and on the farm, and providing information and incentives to consumers to choose food with lower emissions intensities and reduce food waste.

Current policies include subsidies for the use of variable inputs such as fertilisers, feed and fuel, amounting to USD 60 billion per year in 2019–2021 and directly contributing to GHG emissions. Moreover, support tied to specific commodities still accounts for a large share of gross farm receipts in some countries (Figure 2). Support for livestock products, which tend to have high GHG emissions intensities, amounted to USD 111 billion per year across the 54 countries, and exceeded 10 per cent of gross farm receipts in 5 countries.

Despite their importance for achieving food security, climate and other food systems goals, investments in these areas have been falling relative to the size of the sector for most of the past two decades. Overall, support to general services accounted for 13 per cent of total support for the sector in 2019–2021, down from 16 per cent in 2000–2002 (Figure 3). There is therefore considerable scope for reforms that support both food systems objectives and ensure that agriculture contributes to ambitious emissions reduction targets.

The opinions expressed and arguments employed herein are those of the authors and do not necessarily reflect the official views of the OECD or of its Member countries.