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Are Farms Located in Less-Favoured Areas Financially Sustainable? Empirical Evidence from Polish Farm Households

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  • Radosław Pastusiak

    (Corporate Finance Department, Faculty of Economics and Sociology, University of Lodz, 90-213 Lodz, Poland)

  • Michał Soliwoda

    (Corporate Finance Department, Faculty of Economics and Sociology, University of Lodz, 90-213 Lodz, Poland)

  • Magdalena Jasiniak

    (Corporate Finance Department, Faculty of Economics and Sociology, University of Lodz, 90-213 Lodz, Poland)

  • Joanna Stawska

    (Central Banking and Financial Intermediation Department, Faculty of Economics and Sociology, University of Lodz, 90-213 Lodz, Poland)

  • Joanna Pawłowska-Tyszko

    (Department of Farm Accountancy, Institute of Agricultural and Food Economics—NRI, 00-002 Warsaw, Poland)

Abstract

The topic of farms that deal with environmental constraints is an ongoing agricultural policy issue, including within the Common Agricultural Policy. We propose empirical evidence based on a sample of Farm Accountancy Data Network (FADN) farm households, evaluate the influence of chosen factors on financially sustainable farm development and verify less-favoured area (LFA) farms’ growth compared with non-LFA households. To specify farm households, we use the Sustainable Growth Challenge (SGC) model and DuPont decomposition based on financial measures and indicators that were adopted from corporate finance. It is concluded that the differences in SGC and revenue growth values between LFA and non-LFA farms mainly results from the system of subsidising LFA farms that receive compensation for farming in areas with adverse environmental conditions. Generally, the impact of agricultural policies on LFA and non-LFA farms is significant and may weaken the effect on LFA. With the exception of education, other sociodemographic factors do not highly influence farm efficiency. Along with improvements in the quality of human capital (e.g., higher education level), awareness of subsidies, and debt and innovative solutions increases. The interest in precision agriculture and agriculture 4.0 is also growing, which directly translates into better technological and financial efficiency of farms.

Suggested Citation

  • Radosław Pastusiak & Michał Soliwoda & Magdalena Jasiniak & Joanna Stawska & Joanna Pawłowska-Tyszko, 2021. "Are Farms Located in Less-Favoured Areas Financially Sustainable? Empirical Evidence from Polish Farm Households," Sustainability, MDPI, vol. 13(3), pages 1-26, January.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:3:p:1092-:d:484451
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    Cited by:

    1. Marek Zieliński & Piotr Koza & Artur Łopatka, 2022. "Agriculture from Areas Facing Natural or Other Specific Constraints (ANCs) in Poland, Its Characteristics, Directions of Changes and Challenges in the Context of the European Green Deal," Sustainability, MDPI, vol. 14(19), pages 1-22, September.

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