The Impact of Public Support on the Economic Performance of Field Crop Farms in Bulgaria
The Impact of Public Support on the Economic Performance of Field Crop Farms in Bulgaria

Author(s): Damyan Kirechev
Subject(s): Politics / Political Sciences, Politics, Economy, Business Economy / Management, Agriculture, Public Administration, Economic policy
Published by: Университет за национално и световно стопанство (УНСС)
Keywords: public support; agriculture subsidies; field crop farms; efficiency; net income; FADN analysis
Summary/Abstract: This study examines the impact of public support on the economic performance of field crop farms in Bulgaria. The study aims to assess the extent to which public support contributes to the income and growth of field crop farms across economic sizes. Economic models are used to assess the extent to which public support influences farm economic performance by improving farm efficiency and farmers' incomes. A comparison with similar farms in the EU is made, identifying and assessing key variables affecting farm economic performance, and providing suggestions for improving public support. The research methodology is based on panel data from FADN for the period 2007-2023, and regression analysis is used to assess the impact of factors such as subsidies, asset efficiency, indebtedness, and costs on income formation. The analytical work includes: 1) assessment of the relationship between net farm income and subsidies; 2) assessment of the dependence of net farm income on subsidies, resource management, and financial stability; 3) assessing the dependence of farmers' net income on the intensity of costs; and 4) assessing the dependence of farmers' net income on the structure of costs. The results provide empirical evidence on the effectiveness of public support, examining differences across European Union programming periods. The analysis of farmers' net income from subsidies indicates a strong positive relationship between the two variables, with a large share of farmers' net income attributable to subsidies. For the average field crop farm, the most significant factors for profitability are subsidies and ROA. A €1 increase in subsidies provides €1.67 in net farm income. The model explaining the impact of cost intensity on income identifies subsidies as a significant factor, along with the intensity of production costs. A €1 increase in subsidies provides €1.58 in net farm income. The model assessing the structure of costs on income indicates that ROA has the highest significance, while subsidies have a complementary effect. An increase in subsidies by €1 provides €1.53 in net farm income. The results prove the importance of subsidies and ROA as key factors for profitability in field crop farms. Subsidies at this stage of Bulgarian field crop farms remain crucial for covering production losses, but need to be linked to farm market performance and to achieving profitability and sustainability. The study can improve the information base for formulating policies to increase the economic sustainability of field crop farms in Bulgaria, depending on their size.

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