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

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.

Agriculture from Areas Facing Natural or Other Specific Constraints (ANCs) in Poland, Its Characteristics, Directions of Changes and Challenges in the Context of the European Green Deal

“…1305/2013 defines ANCs affected by specific constraints, which should be characterized by constraints, where land management need be continued to preserve or improve the natural environment, maintain the areas the countryside and to preserve the touristic potential of the area or to protect the coastline. According to the guidelines contained in the above regulation, up to 10% of the country's land area may be classified as ANCs affected by specific constraints [51,52]. Due to the capacity of the used definition of ANCs affected by specific constraints, in Poland, the existing ANCs in sub-mountain areas (ANCs affected by specific constraints-zone 2) were included and new divisions were introduced to compensate for the loss of ANCs facing significant natural constraints due to the deviation from the social criteria.…”

Integrated Service Architecture to Promote the Circular Economy in Agriculture 4.0

“…The analysis of climate conditions for agriculture is based on three factors: resource management, ecosystem conservation [114], and adequate services to farmers using information technology, thus generating profitability, product quality, and reducing the environmental footprint, with less use of pesticides [90].…”

Determinants of Return-on-Equity (ROE) of Biogas Plants Operating in Poland

“…It is based on indicators that can be easily derived from financial statements. It can also be used as a planning and control tool [67][68][69][70]. Moreover, the attractiveness of investments depends on the return on equity.…”

“…It can also be noted that the DuPont analysis has a broader use than just assessing the financial situation of an enterprise. Garcia et al [79] introduced intangible assets to the DuPont analysis, and Pastusiak et al [68] connected analysis of the financial situation of farms using the DuPont model with the Sustainable Growth Challenge (SGC) model, while Qing et al [89] created a new DuPont analysis system based on Economic Value Added of Equity. Kasik and Snapka [90] used the DuPont model to signal possible crisis in a company.…”