The impact of investment support from the Rural Development Programme of the Czech Republic for 2007-2013 on the economic efficiency of farms

Hlavsa, Tomáš and Hruška, Martin and Turková, Edita (2017): The impact of investment support from the Rural Development Programme of the Czech Republic for 2007-2013 on the economic efficiency of farms. Studies in Agricultural Economics, 119 (1). pp. 11-17. ISSN 2063 0476

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Abstract

European agriculture is highly mechanised and its development is to a large extent shaped by the constant need for investment. By combining private capital with public funds, the risk burden associated with investment can be shared. The general economic objective of investment support is to improve the efficiency of production factors, such as labour, land and capital. The Rural Development Programme of the Czech Republic for 2007-2013 included a preferential criterion, the objective of which was to give an advantage to farms in Less Favoured Areas (LFA) by facilitating their access to funding for investments. This paper evaluates the investment activities of agricultural holdings located in Czech LFAs in the period 2011-2015, compared to those that are not located in LFAs. Binary logistic regression was employed to identify factors, such as LFA type, farm size, share of other revenues, indebtedness of a farm and stocking density of cattle, that infl uenced whether a farm was or was not supported with an investment subsidy. We conclude that supported farms in LFAs have higher levels of economic performance and higher labour productivity than unsubsidised farms. It is evident that many farms, especially in mountain areas, are interested in investment activities and are trying to develop their businesses. They have a lower likelihood of business failure than those farms that do not invest.

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