Farm-household financial interactions: A case-study from Flanders, Belgium

Farm-household financial interactions (FHFI), the intermingling of business finances with household finances, is a largely uninvestigated phenomenon in Europe. This is partly because of data scarcity as the main farm-level accounting database, the FADN, does not include financial information at the household level. Based on primary survey data from Flanders (Belgium), we develop a proxy indicator for FHFI and explore its determinants and impact on future farm performance. Our results show substantive FHFI within Flemish farm households. The results further suggest that it could be interpreted as a deliberate risk management strategy, as we observe greater FHFI in farms operated by more risk averse farmers and with higher levels of financial risk. Nevertheless, more intense FHFI are associated with lower future farm performance. Hence, questions relating to its effect on long-term survival and adaptive capacity remain.