Articles
THE FINANCING OF NEW HOLDINGS IN GLASSHOUSE PRODUCTION
The capital built up in the period before take-over of the business is no longer sufficient largely to finance the large sums needed to start a business, owing to the galloping inflation of recent years.
In addition, inflation has made interest charges high.
The interest rate is not only a premium for making capital available but also compensation for the losses of capital as a result of the decline in purchasing power.
The considerable repayment and interest obligations bound up with the entrepreneur’s poor capital position – both absolutely and relatively in respect of the overall need for capital – exert considerable pressure on liquidity, especially in the first years of business.
Considerable impairment of spendable income can be avoided only by favourable operating results and – in the longer term – by positive savings.
In order to get a clear insight into this problem, the Agricultural Economics Research Institute has examined the financial position of 136 young growers who during the period 1972/1973 started a holding in the field of vegetable culture and floriculture in the main glass-house districts in the Netherlands.
The entrepreneurs investigated were younger than 40 years when they started in business, and the labour requirement of the holdings is at least one man-year.
The methods of taking-over or founding a business covered by the investigation may be described as follows:
- A son – or more than one person – takes the parental business over (the "normal" take-over of the business on the basis of a change from older to younger generation).
- Cessation of or withdrawal of participants from those joint operations that have been temporarily formed on a basis of a generation change, whereby one or more younger-generation operators takes or take (practically) the whole business over.
- The acquisition of a non-parental glasshouse business.
- The founding of a new glasshouse business.