The farm size in the less-favoured areas and the economy of support spending on public goods production in the case of the Czech Republic

Abstract

Opportunities for savings in both human labour and technical equipment were tested on the case of large farms situated in the less-favoured areas (LFA). Large LFA farms were found to be undoubtedly more efficient than the small ones, as well as the diversification of activities (to non-agricultural) was much wider at the large farms in the Czech Republic (CR). The targeting of the objectives of the LFA measure was analysed on the cases of the selected types of the small and large farms and also the amounts of support, devoted to reach these objectives. The paper further analyses economic results of the small and large farms in the LFA within the CR, and evaluates the impacts of the current LFA measures, where the payment distribution is based only on the grassland area, regardless of the farm size in the CR. Based on these analyses, it was suggested to distribute the LFA payments in the CR per 1ha of utilised agricultural area of farm. Also, it was showed that it would be suitable to introduce a graded decrease of the LFA payments rates according to the farm size. The analysis proves that the economic survival of the large farms, measured as the farm net value added per one annual work unit, will not be endangered.