Analysis of the Effects of Subsidies on the Economic Behavior of Agricultural Businesses Focusing on Animal Production

Abstract

Entry into the European Union and the acceptance of Common Agricultural Policy had a fundamental impact on the economic behavior of animal production businesses in the Czech Republic. Some authors have even reached the conclusion that the slump in animal production is the most prominent manifestation of Common Agricultural Policy. The submitted article quantifies the effect of subsidy policy on production, costs and technical efficiency of agricultural farms. It analyzes the economic behavior of businesses receiving subsidies and of businesses that did not receive subsidies. As part of the study, the microeconomic data of 173 animal production businesses are analyzed. The main methodological tool is the construction of production and cost functions. The effect of subsidy policy on technical efficiency was analyzed by way of the frontier production function model.The article was elaborated under one goal of research intention MSMT 6046070906 “Economics of Resources of Czech Agriculture and Their Efficient Use within Multifunctional Agri-Food Systems”.