Are Farms Located in Less-Favoured Areas Financially Sustainable? Empirical Evidence from Polish Farm Households

Radosław Pastusiak, Michał Soliwoda, Magdalena Jasiniak, Joanna Stawska and Joanna Pawłowska-Tyszko
Additional contact information
Radosław Pastusiak: Corporate Finance Department, Faculty of Economics and Sociology, University of Lodz, 90-213 Lodz, Poland
Michał Soliwoda: Corporate Finance Department, Faculty of Economics and Sociology, University of Lodz, 90-213 Lodz, Poland
Magdalena Jasiniak: Corporate Finance Department, Faculty of Economics and Sociology, University of Lodz, 90-213 Lodz, Poland
Joanna Stawska: Central Banking and Financial Intermediation Department, Faculty of Economics and Sociology, University of Lodz, 90-213 Lodz, Poland
Joanna Pawłowska-Tyszko: Department of Farm Accountancy, Institute of Agricultural and Food Economics—NRI, 00-002 Warsaw, Poland

Sustainability, 2021, vol. 13, issue 3, 1-26

Abstract: The topic of farms that deal with environmental constraints is an ongoing agricultural policy issue, including within the Common Agricultural Policy. We propose empirical evidence based on a sample of Farm Accountancy Data Network (FADN) farm households, evaluate the influence of chosen factors on financially sustainable farm development and verify less-favoured area (LFA) farms’ growth compared with non-LFA households. To specify farm households, we use the Sustainable Growth Challenge (SGC) model and DuPont decomposition based on financial measures and indicators that were adopted from corporate finance. It is concluded that the differences in SGC and revenue growth values between LFA and non-LFA farms mainly results from the system of subsidising LFA farms that receive compensation for farming in areas with adverse environmental conditions. Generally, the impact of agricultural policies on LFA and non-LFA farms is significant and may weaken the effect on LFA. With the exception of education, other sociodemographic factors do not highly influence farm efficiency. Along with improvements in the quality of human capital (e.g., higher education level), awareness of subsidies, and debt and innovative solutions increases. The interest in precision agriculture and agriculture 4.0 is also growing, which directly translates into better technological and financial efficiency of farms.

Keywords: less-favoured areas; sustainable agriculture; agricultural policy; farm profitability (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.mdpi.com/2071-1050/13/3/1092/pdf (application/pdf)
https://www.mdpi.com/2071-1050/13/3/1092/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:13:y:2021:i:3:p:1092-:d:484451

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().