Structure and determinants of the cost of setting up a farm: The case of young farmers in Central France

Abstract

The experience of young farmers setting up in business has important implications for the rejuvenation of the age profile of the farming profession. The cost of taking over a farm is a key factor governing access to the profession. We focus here on the cost that young farmers must incur in order to take control of a farm business, and the determinants of this cost at the time of transfer. The contribution of this paper is that we investigate the total cost of setting up a farm, which includes not only the purchase price paid by the farmer on taking over the farm, but also the cost of adapting the farm for their projects and needs; that is, the investment costs in the first 4 years following the set up. Our analysis is based on an original database of administrative records for grants to young farmers in the French region of Puy-de-Dôme during the period 2007–2017. The results show that the average purchase price is around 80,000 Euros, while the investment required during the first 4 years following set-up is an additional cost of almost 200,000 Euros. The total cost of setting up depends on the young farmer's age and education, the size of the farm, its legal status, the main production on the farm, and the levers used to create value, such as short supply chains, on-farm processing, and using a quality label, however, producing using organic practices and setting up in a family context do not influence the cost.