Role of debt and the ability to create equity in a family farm

The aim of the work was to assess the dependence between debt level and the creation of equity for the farmer. In this paper were verified the opinions found in literature concerning the positive impact of debt-to-equity farmer. The study was carried out on family farms belonging to the “large” farms according to the classification of the Farm Accountancy Data Network (FADN PL) based on economic size ESU (that is about 45 ESU). The farms were divided into two different groups on account of level their debt. To analyze data were used the descriptive statistics method and regression models. Family farms with a larger level of debt showed better results and the regression models confirmed the positive influence of debt on the ability to create value for farms. This model is consistent when farmers benefit from preferential credit. This form of debt was dominated in the studied farms. The results of the research may constitute an exit point for conducting analysis for farmers considering to take out a loan or credit.