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An Empirical Approach for Optimizing the Production Structure of a Farm Operating in a Mountain Area

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Listed:
  • Angel Sarov
  • Krasimir Kostenarov

Abstract

This study analyses the effect and the impact of Common Agricultural Policy (CAP) subsidies on the production structure of a selected agricultural enterprise operating in a mountainous area. În the bases of mathematical model of the economy is to optimize the gross margin and the farm profit by allocating available resources according to the restrictions imposed. During the process of solving them, we considered into account many complex factors and dependencies. It is concluded that subsidies received under CAP have no impact on the structure of production. The article presents one case from which no general conclusions can be drawn about the effect of CAP subsidies on all farms. When applying the model in practice, it should be borne in mind that the model results have a number of conventions, which is a challenge for managers not to make hasty decisions based on the optimization of the task's solution.

Suggested Citation

  • Angel Sarov & Krasimir Kostenarov, 2019. "An Empirical Approach for Optimizing the Production Structure of a Farm Operating in a Mountain Area," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 164-184.
    • Handle: RePEc:bas:econst:y:2019:i:5:p:164-184
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    References listed on IDEAS

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    1. Marian Rizov & Jan Pokrivcak & Pavel Ciaian, 2013. "CAP Subsidies and Productivity of the EU Farms," Journal of Agricultural Economics, Wiley Blackwell, vol. 64(3), pages 537-557, September.
    2. Ciliberti, Stefano & Frascarelli, Angelo, 2015. "A critical assessment of the implementation of CAP 2014- 2020 direct payments in Italy," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 4(3), pages 1-17, December.
    3. Arovuori, Kyösti & Yrjölä, Tapani, 2015. "The impact of the CAP and its reforms on the productivity growth in agriculture," 147th Seminar, October 7-8, 2015, Sofia, Bulgaria 212241, European Association of Agricultural Economists.
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    More about this item

    JEL classification:

    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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