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An Assessment of the Differentiated Effects of the Investment Support to Agricultural Modernisation: the Case of the Czech Republic

Author

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  • Ratinger, T.
  • Medonos, Tomas
  • Hruška, M.

Abstract

Despite being considered as a key instrument of the agricultural development policy, the investment support has received only limited attention in the Czech economic literature. The objective of this paper is to assess economic effects of the measure 121 “Modernisation of Agricultural Holdings” of the RDP 2007-2013 on the Czech farms. A particular focus is on the distribution of the supports and differentiated impacts of the supports according to the production conditions and farm size. The counterfactual approach is adopted, deploying direct matching algorithm with the treatment of hereoscedasticity. We show significant benefits of the investment support in terms of business expansion (represented by Gross value added) and labour productivity improvements. Analysing the sample of applicants for Measure 121 we show that large farms get much larger support than smaller farms. By splitting the sample by natural conditions and by size we demonstrate that benefits are higher on farms in less favoured areas and on medium-size farms in both the absolute and relative terms. Investigating the changes in bank indebtedness we yield an indication that on average the support mobilised additional resources to finance the sector investment. However, there is no statistically significant increase of bank indebtedness on large farms due to investment support. In turn, it can be interpreted that deadweight is rather high on large farms, while on average the deadweight of the investment support programme is rather low. Thus, the programme can improve its social efficiency if it is targeted to small and medium size farms.

Suggested Citation

  • Ratinger, T. & Medonos, Tomas & Hruška, M., 2013. "An Assessment of the Differentiated Effects of the Investment Support to Agricultural Modernisation: the Case of the Czech Republic," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 5(4), pages 1-12, December.
    • Handle: RePEc:ags:aolpei:162256
    DOI: 10.22004/ag.econ.162256
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    References listed on IDEAS

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    2. Riccardo D’Alberto & Matteo Zavalloni & Meri Raggi & Davide Viaggi, 2018. "AES Impact Evaluation With Integrated Farm Data: Combining Statistical Matching and Propensity Score Matching," Sustainability, MDPI, vol. 10(11), pages 1-24, November.
    3. Victoria GANEA & Oleg BUJOR & Diana GROZAV, 2014. "Operation Principles Of Innovational Policy In Order To Intensificate The Economic Growth," ECONOMY AND SOCIOLOGY: Theoretical and Scientifical Journal, Socionet;Complexul Editorial "INCE", issue 3, pages 73-84.
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    5. Jindřich Špička, 2018. "How Do Agricultural Biogas Investments Affect Czech Farms?," Central European Business Review, Prague University of Economics and Business, vol. 2018(4), pages 34-60.
    6. Ondřej Dvouletý & Ivana Blažková, 2019. "The Impact of Public Grants on Firm-Level Productivity: Findings from the Czech Food Industry," Sustainability, MDPI, vol. 11(2), pages 1-24, January.
    7. Vaida Sapolaite & Armands Veveris & Artiom Volkov & Virginia Namiotko, 2019. "Dynamics in the Agricultural Sectors of the Baltic States: the Effects of the Common Agricultural Policy and Challenges for the Future," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 15(4), pages 211-223.
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    9. Ratinger, Tomáš & Medonos, Tomáš & Hruška, Martin, 2015. "The empirical assessments of the effects of the investment support to agriculture in the Czech Republic," 147th Seminar, October 7-8, 2015, Sofia, Bulgaria 212242, European Association of Agricultural Economists.
    10. Pia Nilsson & Sofia Wixe, 2022. "Assessing long-term effects of CAP investment support on indicators of farm performance," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 49(4), pages 760-795.
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