Analysis of distribution impact of subsidies within the Common Agricultural Policy on field production businesses in the Czech Republic

Abstract

The article deals with the analysis of inequality in the distribution of the economic result in businesses engaging in field production in the Czech Republic, by way of the assessment of the impact of subsidies on the said inequality and by defining the effect of the size of the business on the economic result as well as inequality. The methodical tool is the quantification of the Gini coefficient and its elasticity. The data basis consists of panel data of 140 agricultural businesses focusing on field production for the period of the years 2005–2010.The main results of the submitted article substantiate a high inequality in the distribution of the economic result for the accounting period among field production businesses. The said inequality is not generally caused by the differing size of the analyzed businesses, and the associated volume of subsidies obtained, but is affected by other factors, such as the management quality, the investment activity of the business, or exceptional events. Subsidies do contribute to the more equal distribution of the economic result, but their impact is very small. Out of the individual categories of subsidies, the ones with the main redistribution effect are direct payments, as a result of the high proportion of total subsidies that they comprise.

Keywords

• farm profit
• farm loss
• inequality
• Gini coefficient
• subsidy
• arable farming