The impact of the support for less favourite areas on the economic situation of the supported farms | Atbalsts lauksaimniecībai mazāk labvēlīgos apvidos un tā ietekme uz lauku saimniecību ekonomisko situāciju
2014
Veveris, A., Latvian State Inst. of Agrarian Economics, Riga (Latvia)
The aim of the present paper is to evaluate the impact of the support of the Rural Development Programme of Latvia measure for less favourable areas (LFA) on the economic situation of the supported farms. This type of support has been provided in Latvia since 2004, defining 74.4% of the total area as less favourable areas. Regarding the number of support beneficiaries, LFA is the most popular measure of the Rural Development Programme (RDP) of Latvia. On average around LVL 27 million of public financing is paid out annually accounting for about 20% of total RDP public financing. To date there have been several research studies about the impact of support on the use of land but there is a lack of data about how it has affected the economic viability of the supported farms. The research was performed with the aim to evaluate the dynamics of the production output value and the net value added (NVA) of the farms in 2008 – 2012 by comparing farms that are located outside LFA territories and those farms that have received the LFA support. The analysis has been performed across both, distribution by LFA categories and the main types of farm specialization and groups of the economic size. The main data source is FADN. The results indicate that farms that have received the LFA support show significantly better net added value performance. The analysis of different size groups reveals that the LFA support is very important for small and medium farms, but it is the most significant for crop cultivation farms regarding specialization groups. The importance of the LFA support was not the same every year – it was the largest during the recession (year 2009) when the share of the LFA support in the farms’ NVA was 21% while in the other analysed years it was 12%.
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