Abstract
The income of farmers and their families is the base for consumption, savings, and investment. However, apart from its level and adequate ratios to the income of the agricultural population, its stability is also important. This very thesis is the main axis of the analysis of the income situation of Polish farmers participating in the FADN from 2004 to2018. Its documentation is also one of the main aims of this paper. To do this from the right theoretical perspective, theinitial part of the paper presents the schemes of this income calculation and its determinants, as well as issues related to measuring income risk and the factors which affect it. Both static and dynamic approaches were used in this part of the paper. The other, thoroughly empirical and retrospective part of the paper focuses on the relationships between income and budget support, economic size, production type, and spatial location of agricultural farms. The importance of non-agricultural income was also shown, although relevant information in the FADN is not very extensive. The identification of the risk-income strategy should also be treated as a preliminary approach to the analyzed issue.
Highlights
The income of farmers and their families is the base for consumption, savings, and investment
The net income of entities with a legal personality becomes their financial result, which is further transformed into taxable income, while in financial management, it can be transformed into cash income, that is very often equated with cash flow, with an option for its further disaggregation
In the case of farms run by natural persons, off-farm income added to general income is the personal income of a farming family, which is spent on consumption and accumulation
Summary
Income in micro- and macroeconomics can be understood as the creation of financial opportunities by particular entities and entire societies to meet consumption and development needs at a specific time. This factor is closely related to the variability of the natural and soil conditions, which has an obvious impact on production, revenue, and income risks This circumstance means, among others, the need to develop models for various types of farms and their operating conditions. The two above-mentioned Irish agricultural economists approached the issue of measuring agricultural income volatility in a very interesting way, distinguishing a short-term (up to one year) perspective and medium-term (up to 9 years) one, based on data provided by 911 farms in the Irish FADN for 2005-2013, i.e., after the decoupling of direct payments under the CAP. This shows how big the impact of direct payments on income stability is, this support may significantly reduce/displace farmers’ interest in other income risk management instruments. It needs to be noted that Loughrey and Hennessy used one more medium-term measure of income volatility, i.e., its standard deviations
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