Agricultural and food industries constitute a significant part in the economy of European Union (EU), thus providing 15 million jobs and creating 4.4% of the gross domestic product. EU Common Agricultural Policy (CAP) is adopted in all 27 member states and a significant part of budget is allocated to implement it - in 2008 it was 58.8 billion EUR or 44.5% of the total budget. This research performed the analysis of the theoretical, historical and economic aspects of the CAP. Eight main stages of the reform can be distinguished in the CAP development. They have their own characteristics, goals and main support tools. The process of the CAP reform has not been finished yet.

The purpose of this article has been to present a range of products which can be obtained from agricultural production and used for energy purposes. The domestic demand for plant material to be converted to biocomponents was assessed, including the demand for oilseed rape seeds and other grain used to make bioethanol in Poland. One of the ways to limit the adverse effect of fossil fuels on the environment is by using renewable resources. Agriculture is the producer of biomass used to make biocomponents for liquid fuels and raw materials for substitution of solid fuels. The EU, wishing to stimulate production of biomass for energy purposes, has brought to life several legal acts which force the use of biofuels in the European Community. Farmers who produce substrate for bio-fuel production were offered subsidies to energy crop plantations, at first paid from the state budget, and in 2007 – 2009 provided under the Common Agricultural Policy (CAP), which increased the farmers’ revenues from farming. The decisions approved of while reviewing the CAP are to improve – via the market mechanism – the production and export potential of the whole EU. This is to be achieved, for example, by abolishing the subsidies to energy crops, which ceased to be paid in 2010. Such subsidies improved (artificially) the profitability of energy crop plantations, while causing a relative decrease in food production in Europe. By participating in the CAP, Poland is obliged to undertake certain measures in the domestic policy that will comply with the decisions made on the EU level.

The European Union (EU) Common Agricultural Policy (CAP) affects the development of the agricultural industry and rural areas in all the Member States. A very important role is played by various support payments as one of the policy instruments. The CAP has been developing and is being reformed; therefore, it is important to assess the effect of various CAP support instruments on the development of the agricultural industry. Therefore, the research aim is to assess the support instruments and kinds of support as well as their effects on selected agricultural indicators. The research study proceeds in three stages or phases: first, the identification of the total amount of support payments paid and the key kinds of support; second, a detailed analysis of the key kinds of support; third, the identification of associations between the amounts of support payments and other agricultural and farm performance indicators. The research found that in the period 2005 – 2014 in Latvia, the total amount of support amounted to EUR 4.3 billion, of which EUR 520 million or 12% were received by approximately 1000 FADN farms. The most significant kinds of financial support in Latvia were direct payments, accounting for 47% of the total amount of support and financial assistance provided for rural development with 39%. The total amount of financial support and the amount of area-based payments affected the key agricultural indicators as well.

The increasing frequency and magnitude of adverse meteorological events together with the growing uncertainty in the upcoming future pose more and more challenges to agriculture. Therefore, the future sustainability of agriculture will increasingly depend on its resilience, i.e. the capacity to withstand various perturbations and to recover from them. The direct payment (DP) system of the EU Common agricultural policy (CAP) is the most financed EU support scheme for agriculture; however, research on its impact on the important phenomena of resilience is scarce and fragmented. In order to fill this gap, this paper offers an extensive overview of literature and a summarized list of factors that are mentioned most often as potentially influencing the agricultural resilience. Based on this, the possible impact of DP on agricultural resilience was analysed. In this paper, it is argued that this impact is transferred mostly through changing farms’ financial capabilities as well as farmers’ attitudes and behaviour, and is both positive and negative. Such phenomena as low crop insurance uptake and decrease in productivity may be due to the overcrowding effects of direct payments. These hypotheses are being tested in a survey, conducted in the meantime.

The impacts of agricultural policies are decisive on the agricultural sector, especially in the case of the European Union’s (EU) Common Agricultural Policy (CAP). The 2013 CAP reform introduced several new measures. In budgetary terms, basic payment and greening were the most significant ones. Besides, coupled supports, young farmer and small farmers scheme should be mentioned. To reveal the changes caused by these measures, the time horizon of the study is 2013−2017. Since the subsidies represent a significant part of the income generated in the agricultural sector, the basic hypothesis of the study is that the production units concerned (individual farms, private enterprises) gave economically rational answers. In practice, this means trying to fully adapt to the changes to maximize support. Based on the analysed datasets (Hungarian Central Statistical Office and Hungarian State Treasury), it became evident that farmers responded rationally: splitting up farms against capping, moving towards the lowest resistance to comply with greening, plus associating them with the extra support of coupled payments. Generational renewal is a key issue; however, the present form of young farmers’ scheme needs to be refined to be more effective. Small farmers scheme is a good opportunity for farmers with less than 5.5 ha and most of the concerned farmers chose well. However, there are about 6,000 farms that are too small for the standard system, while 772 farms that are too large for the small farmers scheme.

Conducting agricultural activity in areas facing natural constraints (ANC) affects farms’ production and economic results. ANC payments were introduced to compensate farmers for higher costs and lost income. The aim of the study is to compare the production and economic results of farms receiving ANC support with other farms. It was hypothesized that ANC farms achieve lower production and economic results than other units. The analysis is based on Polish FADN data concerning 2015. The sample included 12,105 farms, of which 4,652 (38.43%) received ANC subsidies. To describe the characteristics of the surveyed farms, positional measures were used due to strong asymmetry. The Mann-Whitney U test was used to assess the significance of differences in distributions. The results indicate the existence of significant differences in the production potential, production and economic efficiency of farms receiving ANC payments and ones without them. Agricultural farms receiving ANC payments are characterized by a significantly smaller area of agricultural land, a lower share of arable land in the UAA and a smaller share of leased land. They also have lower production volume, lower land and labour productivity. They achieve relatively lower incomes. Nevertheless, the payments to a small extent reduce these differences. On this basis, it can be concluded that ANC payments in Poland do not provide full compensation for differences in the production and economic results of a farm with worse agri-environmental conditions. Therefore, the impact of the CAP on the economic results of farms located in ANC is relatively small.