The impact of the support instruments of the Common Agricultural Policy on economic and financial stability of farms in EU countries

Authors

  • Michał Soliwoda Instytut Ekonomiki Rolnictwa i Gospodarki Żywnościowej – Państwowy Instytut Badawczy.

DOI:

https://doi.org/10.18778/0208-6018.319.07

Keywords:

agricultural finance, farm, financial stability, debt/assets, income, Common Agricultural Policy

Abstract

EU subsidies influence the economic and financial situation of farms through several complex channels, although their economic and financial impact may be observed with a delay. The aim of this study was to assess the impact of selected support instruments of the Common Agricultural Policy, CAP (including direct payments and subsidies from Pillar 2) on economic and financial stability (respectively, the level of net farm income and debt/asset ratio) of farms in EU countries at regional level. The research goals included: (1) to present differences in the level and the structure of instruments of CAP support (excluding investment subsidies) at the level of member states; (2) to determine significance, strength and direction of the relationship between amounts of subsidies received and selected indicators of economic and financial stability of farms. The Farm Accountancy Data Network (FADN) database provided secondary data for the study. The dynamics of changes was analyzed for years 2007 and 2012. At the country level, the share of subsidies related to rural development programs gradually increased during the years 2007–2012. A weighted regression approach with correction of heteroscedasticity (a total of four models) was employed separately for the 2007 and 2012 (based on data from the FADN regions). Although subsidies (excluding for investment) under the CAP influenced quite strongly the level of agricultural income, the impact of subsidies on the financial stability was ambiguous. This may lead to the refinement of regional approach in relation to the selection of support instruments and the determination of the amounts of support provided under the CAP.

Downloads

Download data is not yet available.

References

Boulanger P., Philippidis G. (2015), The EU budget battle: Assessing the trade and welfare impacts of CAP budgetary reform, ”Food Policy”, vol. 51, February 2015, p. 119–130.
Google Scholar

Campbell D., Klaes M., (2005), The principle of institutional direction: Coase’s regulatory critique of intervention, ”Cambidge Journal of Economics”. 29, p. 263–288.
Google Scholar

Cantore N., Kennan J., Page Sh. (2011), CAP reform and development. Introduction, reform options and suggestions for further research, Overseas Development Institute, London.
Google Scholar

Carden A., Horwitz S. (2013), Is Market Failure a Sufficient Condition for Government Intervention?. Library of Economics and Liberty, 2013. http://www.econlib.org/library/Columns/y2013/CardenHorwitzmarkets.html (retrieved: 15.07.2015).
Google Scholar

De Gorter H., Swinnen J. (2002), Political economy of agricultural policy. In: B. L. Gardner & G. C. Rausser (Hrsg.): Handbook of Agricultural Economics, vol. 2, part 2, Elsevier, p. 1893–1943.
Google Scholar

Dworak M., Grzelak M. M. (2015), Conditions For The Development Of Polish Agriculture In The Context Of Globalization And European Integration, Comparative Economic Research, Volume 18, Number 2, 2015.
Google Scholar

European Commission (2013), Overview of CAP Reform 2014–2020, Agricultural Policy Perspectives Brief N°5*, December 2013, http://ec.europa.eu/agriculture/policy-perspectives/policy-briefs/05_en.pdf (retrieved: 10.07.2015).
Google Scholar

European Commission (2014a), Community Committee For The Farm Accountancy Data Network (FADN) Definitions of Variables used in FADN standard results (http://fadn.pl/wp-content/uploads/2012/12/RICC-882-rev9.2-Definitions-of-Variables.pdf, retrieved: 10.07.2015).
Google Scholar

European Commission (2014b), The EU explained: Agriculture. A partnership between Europe and farmers. The EU’s common agricultural policy (CAP): for our food, for our countryside, for our environment, http://ec.europa.eu/agriculture/cap-overview/2014_en.pdf (retrieved: 10.07.2015).
Google Scholar

European Commission, Agriculture and Rural Development (2015a), Farm Accountancy Data Network, http://ec.europa.eu/agriculture/ricaprod/concept_en.cfm (retrieved: 10.07.2015).
Google Scholar

European Commission, Agriculture and Rural Development (2015b), Health Check of the Common Agricultural Policy.
Google Scholar

European Commission, Agriculture and Rural Development (2015c), History of the CAP, http://ec.europa.eu/agriculture/cap-history/index_en.htm (retrieved: 10.07.2015).
Google Scholar

Goodwin B., Mishra A., Ortalo-Magne F. (2011), The Buck Stops Where? The Distribution of Agricultural Subsidies. in: Eds. J.G. Zivin, J. Perloff: The Intended and Unintended Effects of U.S. Agricultural and Biotechnology Policies, NBER, Cambridge, p. 15–20.
Google Scholar

Góral J. (2014), Podejście horyzontalne czy regionalne w podziale środków Programu Rozwoju Obszarów Wiejskich 2014–2020? Instytut Ekonomiki Rolnictwa i Gospodarki Żywnościowej – Państwowy Instytut Badawczy, Warszawa.
Google Scholar

Grahl J., Teague P. (2013), Reconstructing the eurozone: the role of EU social policy, Cambidge Journal of Economics, 37: 677–692.
Google Scholar

FADN (2015), FADN Public Database http://ec.europa.eu/agriculture/ricaprod/database/database_en.cfm (retrieved: 10.07.2015).
Google Scholar

Hill B. (2012), Understanding the Common Agricultural Policy, Earthscan, Oxon.
Google Scholar

Karagiannis N. (2001), Key economic and politico-institutional elements of modern interventionism, ”Social and Economic Studies”, 50 (3/4), p. 17–47.
Google Scholar

Kellermann K., Sahrbacher A., Sahrbacher Ch., Balmann A. (2009), Consequences of a progressive reduction of direct payments in Germany: paving the way for post-2013? Agrarwirtschaft 58 (2009), Heft 4, p. 198–208.
Google Scholar

Kling A. (2012), Subjective Value and Government Intervention, Library of Economics and Liberty, http://www.econlib.org/library/Columns/y2012/Klingsubjectivevalue.html (retrieved: 10.07.2015).
Google Scholar

Kulawik J. (Ed.) (2012), Dopłaty bezpośrednie i dopłaty budżetowe a finance oraz funkcjonowanie gospodarstw i przedsiębiorstw rolniczych), Raport PW nr 46, IERiGŻ-PIB: Warszawa.
Google Scholar

Lagerkvist C.J. (2005), Agricultural policy uncertainty and farm level adjustments – the case of direct payments and incentives for farmland investment, European Review of Agricultural Economics 32(1), p. 1–23.
Google Scholar

Mantino F. (2011), Developing a Territorial Approach for the CAP. A Discussion Paper, Institute for European Environmental Policy, May 2011, http://www.ieep.eu/assets/825/Paper_4_-_Final_version_11072011.pdf (retrieved: 10.07.2015).
Google Scholar

Marsden T. (2010), Mobilizing the regional eco-economy: evolving webs of agri-food and rural development in the UK, “Cambridge Journals of Regions, Economy and Society”, 3, p. 225–244.
Google Scholar

Minviel J.J., Latruffe L. (2014), Meta-regression analysis of the impact of agricultural subsidies on farm technical efficiency. Paper prepared for presentation at the EAAE 2014 Congress ‘Agri-Food and Rural Innovations for Healthier Societies’ August 26 to 29, 2014 Ljubljana, Slovenia.
Google Scholar

Moser T., Kapfer M., Sandbichler M., Kirchweger S., Kantelhardt J. (2015), Einfluss von Investitionstätigkeit und Investitionsförderung auf ökonomische Kenngrößen österreichischer Milchviehbetriebe,”Berichte über Landwirtschaft”, Band 93, Heft 1, Mai 2015.
Google Scholar

Poczta W., Średzińska J., Mrówczyńska-Kamińska A. (2009), Determinanty dochodów gospodarstw rolnych Unii Europejskiej według typów rolniczych, „Zeszyty Naukowe SGGW w Warszawie – Ekonomika i Organizacja Gospodarki Żywnościowej‟, 76, p. 17–30.
Google Scholar

Rizov M., Pokrivcak J., Ciaian P. (2013), CAP Subsidies and the Productivity of EU Farms, Factor Markets, Working Paper No. 37, March 2013.
Google Scholar

Schrank W.E. (2003), Introducing Fisheries Subsidies. Fao Fisheries Technical Paper 437 Food and Agriculture Organization of The United Nations, Rome.
Google Scholar

Soliwoda M. (2014), Dilemmas concerning dependencies between direct payments and farm Investment. „Zarządzanie Finansami i Rachunkowość”, 2(1), 2014, p. 33–46.
Google Scholar

Špička J., Machek O. (2015), Change in the production efficiency of European specialized milk farming, “Agricultural Economics – Czech”, 61, 2015 (1), p. 1–13.
Google Scholar

Sumner D. A. (2007), Farm Subsidy Tradition and Modern Agricultural Realities. Agricultural Policy for the 2007 Farm Bill and Beyond, American Enterprise Institute. http://aic.ucdavis.edu/research/farmbill07/aeibriefs/20070515_sumnerRationalesfinal.pdf (retrieved: 10.07.2015).
Google Scholar

Sumner D. A. (2008), Agricultural Subsidy Programs, The Concise Encyclopedia of Economics. Library of Economics and Liberty. http://www.econlib.org/library/Enc/AgriculturalSubsidyPrograms.html (retrieved: 10.07.2015).
Google Scholar

Triest R.K. (2007), The Economics of Subsidies for Community Development: A Primer, https://www.bostonfed.org/commdev/smart-subsidy/10-triest.pdf (retrieved: 10.07.2015).
Google Scholar

Trnková G., Malá Z. (2012), Analysis of Distribution Impact of Subsidies within the Common Agricultural Policy on Field Production Businesses in the Czech Republic. “Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis”, Vol. LX 44, No. 7, 2012, p. 415–424.
Google Scholar

Welfe A., (2008), Ekonometria. Metody i ich zastosowanie, PWE, Warszawa.
Google Scholar

World Trade Organization (2006), World Trade Report. Exploring the links between subsidies, trade and the WTO. https://www.wto.org/english/res_e/booksp_e/anrep_e/world_trade_report06_e.pdf (retrieved: 10.07.2015).
Google Scholar

Zhu X., Karagiannis G., Oude Lansink A. (2008), Analyzing the impact of direct subsidies on the performance of the Greek Olive Farms with a non-monotonic efficiency effects model, Proceedings, 12th Congress of the European Association of Agricultural Economists – EAAE 2008.
Google Scholar

Downloads

Published

2016-10-10

How to Cite

Soliwoda, M. (2016). The impact of the support instruments of the Common Agricultural Policy on economic and financial stability of farms in EU countries. Acta Universitatis Lodziensis. Folia Oeconomica, 2(319), [99]-116. https://doi.org/10.18778/0208-6018.319.07

Issue

Section

Spatial economics

Similar Articles

<< < 18 19 20 21 22 23 24 25 26 27 28 29 30 

You may also start an advanced similarity search for this article.