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How opportunity costs change the view on the viability of farms? Empirical evidence from the EU

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  • Jindřich Špička

    (Department of Economics of Agrarian Sector, Institute of Agricultural Economics and Information, Prague, Czech Republic)

  • Petr Dereník

    (Liaison Agency FADN CZ, Institute of Agricultural Economics and Information, Prague, Czech Republic)

Abstract

The post-2020 Common Agricultural Policy targets at supporting small and medium-sized farms. Capping and redistribution of direct payments would have a direct impact on the economic viability of farms. Calculation of economic income is a reasonable way how to calculate the economic viability of firms. However, accounting profit has been preferred for its estimation so far. The article aims to compare the income from accounting and economic point of view and reveal how much the results differ across the EU. The literature review, an empirical analysis based on Farm Accountancy Data Network (2016-2018), and a clustered heat map were applied. The results provide clear evidence of high variability of opportunity costs when calculating the economic viability in the EU, especially between countries with small intensive farms and some post-communist countries where larger farms dominate.

Suggested Citation

  • Jindřich Špička & Petr Dereník, 2021. "How opportunity costs change the view on the viability of farms? Empirical evidence from the EU," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 67(2), pages 41-50.
    • Handle: RePEc:caa:jnlage:v:67:y:2021:i:2:id:412-2020-agricecon
    DOI: 10.17221/412/2020-AGRICECON
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    References listed on IDEAS

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    6. Wąs, Adam & Sulewski Piotr & Majewski, Edward, 2019. "Methodical and practical aspects of the parity income in the Polish agriculture," Problems of Agricultural Economics / Zagadnienia Ekonomiki Rolnej 291527, Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI).
    7. Sophia Davidova & Matthew Gorton & Tomas Ratinger & Katarzyna Zawalinska & Belen Iraizoz, 2005. "Farm Productivity and Profitability: A Comparative Analysis of Selected New and Existing EU Member States1," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 47(4), pages 652-674, December.
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