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Internal research projects - year 2016

Project No.: 1297

Project title:

Modelling the impact of LFA policy changes on farm economy (Hlavsa)

Responsible solver:

Ing. Tomáš Hlavsa, Ph.D.

Aim of the project:

The motivation for this project is to improve the assessment of the LFA policy changes in context of farm economy. The main aim is to assess the impact of LFA payment changes on farm economy.

Summary of the project:

With regard to the LFA redefinition from 2018 and reflecting the request of data and analytically-based reasoning there is a demand for modeling the impact of the LFA policy changes. The motivation of this internal research project is to improve the assessment of the impact of LFA payments on the farm economy. The methodology is based on statistical methods quantifying relationship between variables including statistical verification of the results achieved. The solution includes a simulation of the impact of factors affecting the performance of farms in order to estimate the proportion of farms with lower performance.
Especially a group of mountain LFA shows a relatively high dependence of net value added on subsidies. Smaller farms showed a negative net value added without current subsidies. As a farm size grows, the share of current subsidies to the net value added decreases and the share of LFA payments to total current subsidies decreases as well. Higher indebtedness is more evident in farms with higher acreage. The regression models show a positive relationship between LFA payments and the net value added per AWU in a group of mountain LFA. This tendency is not obvious in groups of other LFA and non LFA. Change and variability in LFA payments does not affect the distribution of NVA significantly. In the simulation were as significant factors found both crop and animal production and intermediate consumption, which reflects the costs. The variability of these parameters in both mountain and other LFA and across size groups in the LFA increases the sensitivity of NVA on these factors.

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