Analysis of the impacts of Common Agricultural Policy on plant production in the Czech Republic

Abstract

Common agricultural policy has fundamentally projected itself into the business management of individual agricultural businesses. The submission addresses the assessment of the effects of subsidy policy on the production, costs and profit of agricultural businesses that engage predominantly in plant production. At the same time, it determines the effects of subsidy policy on demand for the production factors of labour and land. To the research questions more than 100 agriculture businesses were analyzed. The date from financial statements enabled to construct production function model, to quantify the cost function, the function of demand for land, the demand for the production factor of labour and finally the profit function was constructed. The results of research evidence the fact that direct payments have a negative effect on the production of agricultural businesses, but on the other hand they initiate demand for agricultural land and increase the profit of agricultural producers. The results also show direct payments do not motivate agriculture businesses towards increased production. The direct payments also increase the demand for production factor of land and they have also a significant effect on the value of profit.

Keywords

• Common Agricultural Policy
• subsidies
• plant production
• production factors