Decomposing Dynamics in the Farm Profitability: An Application of Index Decomposition Analysis to Lithuanian FADN Sample

Tomas Baležentis, Aistė Galnaitytė, Irena Kriščiukaitienė, Virginia Namiotko, Lina Novickytė, Dalia Streimikiene and Rasa Melnikiene
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Aistė Galnaitytė: Division of Farm and Enterprise Economics, Lithuanian Institute of Agrarian Economics, LT-03105 Vilnius, Lithuania
Irena Kriščiukaitienė: Division of Farm and Enterprise Economics, Lithuanian Institute of Agrarian Economics, LT-03105 Vilnius, Lithuania
Virginia Namiotko: Division of Farm and Enterprise Economics, Lithuanian Institute of Agrarian Economics, LT-03105 Vilnius, Lithuania
Lina Novickytė: Division of Farm and Enterprise Economics, Lithuanian Institute of Agrarian Economics, LT-03105 Vilnius, Lithuania
Dalia Streimikiene: Division of Farm and Enterprise Economics, Lithuanian Institute of Agrarian Economics, LT-03105 Vilnius, Lithuania
Rasa Melnikiene: Division of Farm and Enterprise Economics, Lithuanian Institute of Agrarian Economics, LT-03105 Vilnius, Lithuania

Sustainability, 2019, vol. 11, issue 10, 1-15

Abstract: The changes in farm structure have been observed in Lithuania as well as in other Central and Eastern European countries. These changes, to a high extent, have been driven by decreasing profitability of the small farms. In this paper, we look into the changes in the profitability of Lithuanian family farms across different farm size groups. Farm size is measured in terms of the standard output. The period covered is 2005–2016. The index decomposition analysis model and Shapley value are adapted for the analysis. The proposed framework ensures complete decomposition among other desirable properties. The decomposition of the changes in profitability was carried out following the DuPont identity. The results suggest that for small (respectively large) farms the asset turnover (respectively profit margin) component appear more important, whereas the leverage effect remained minimal irrespectively of the farm size group.

Keywords: family farms; profitability; Lithuania; index decomposition analysis; DuPont model (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:11:y:2019:i:10:p:2861-:d:232661

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