Is current system of direct payments suitable for farmers in Slovakia?

Abstract

Current system of direct payments in Slovakia can be described as per hectare payment. It is based on the logical assumption that the more land farmers cultivates, the more support they need. However, it seems like this principle works differently among EU member states. Historically, Slovakia is a country with the largest farms in EU 28. This extreme big physical farm size is here connected with the lowest output among EU 28 and simultaneously Slovak farms display also lowest efficiency. Paper examine generally accepted assumption that the more hectares farms utilize, the more subsidies they should receive, to help achieve more output. Research is based on the mutual pair combined correlation analysis, which examined relationship between utilized agricultural area, total output and total subsidies. Surprisingly just the relationship between total subsidies and total output was proved to be positive and in a moderate manner. Relation of total subsidies and utilised agricultural area, respectively total output and utilised agricultural area show the inverse relationship. In spite of the development in most European countries, Slovak outcomes indicates that the more subsidies farmers receive, the less output they achieve. This paradox can be caused by the actual Common Agricultural Policy system of subsidies remuneration which is not necessary suitable for whole EU 28 on the same level. 

Keywords

• utilized agricultural area
• total output
• subsidies
• Slovakia
• farm efficiency