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Farms in the European Union come in a wide variety of sizes and the effect of farm size on profitability (return on assets – ROA) has not been sufficiently investigated. The principal goal of this paper, therefore, is to study the determinants of farm profitability using the panels of the Farm Accountancy Data Network (FADN) on farms of different economic size between 2007 and 2018. We use a profitability function based on ratios that show the production and financial management strategies used by the farms. We also analyse the impact of subsidies under the Common Agricultural Policy (CAP). To deal with endogeneity, we run dynamic panel models using the system generalised method of moments (sys-GMM) estimators. We highlight the important role of the high level of equity turnover. An increase in production relative to the farm's equity plays a crucial role in the growth of profitability for all groups of farms, but it is especially important for smaller entities. In addition, farm managers should control the level of debt since the debt-to-asset ratio is a highly significant negative determinant of farm profitability in most of the groups. The increase in subsidy rate generally translates into higher ROA, but this variable has a negative impact across the largest holdings.

Climate change is one of the most important environmental problems of the modern world. Without an effective solution to this problem, it is not possible to implement sustainable development. For this reason, in the European development strategies, including the European Green Deal (EGD), the reduction in greenhouse gas (GHG) emissions is one of the priorities. This also applies to sectoral strategies, including those related to agriculture. In this context, the monitoring of changes in GHG emissions becomes particularly important, and its key condition is an applicative estimation method, adapted to the available data and levels of assessment (globally, country, sector, economic unit). GHG emission calculations at the level of the agricultural sector are officially estimated by the state and non-governmental organisations. However, calculations at the level of the agricultural unit-farm remain a challenge due to the lack of detailed data or its incomplete scope to estimate GHG emissions. The other issue is the necessity of a representative data nature, taking into consideration the different profiles of various farms. The research focused on presenting a methodological approach to utilising FADN (Farm Accountancy Data Network) data for estimating GHG emissions at the farm level. The Intergovernmental Panel on Climate Change (IPCC) methodology was adopted to use available farm-level data. Some assumptions were needed to achieve this goal. The article presents the subsequent stages of GHG calculation using the FADN data. The results reveal significant differences in GHG emissions among farm types. The presented results indicated the primary sources of emissions from agriculture, including energy (e.g., fuel and electricity consumption), thus outlining the scope of action that should be taken to reduce emissions effectively. The study confirms that the method used helps estimate emissions at the farm level. Its application can lead to better targeting of climate policy in agriculture.

A key area of sustainable agriculture is the economic sustainability of agricultural holdings. Agricultural holdings should achieve such an income that they are able to cover all of their costs. As part of this study, an indicator of entrepreneurial income and an indicator of economic profit were proposed. Economic profit, in contrast to entrepreneurial income, considers the costs of lost opportunities, so-called opportunity costs. For this purpose, three indicators of the opportunity costs of production factors of labor, land, and capital were defined and calculated. To assess economic profit between different groups of holdings, an economic viability index is established, which identifies a holding as sustainable or at risk. This indicator is composed of the entrepreneurial income indicator and the difference between entrepreneurial income and economic profit. Based on FADN data of a five-year time series, it was confirmed that extensive holdings specializing in grazing livestock are among the most economically endangered subjects. The highest proportion of sustainable holdings was found in holdings specializing in milk production. From the size point of view, small holdings are most endangered, which was confirmed for all production focuses. In contrast, more large and very large holdings were included in the group of viable holdings.

In recent literature, the issue of sustainability and its measure has been addressed with different approaches that depend on the multidimensional nature of the concept and the specific sector and context to which it applies. The present work focuses on the economic sustainability component and suggests an operative measure at the farm level. The measure of economic sustainability has been applied to Italian family farms using Farm Accountancy Data Network (FADN). Based on this data, an efficiency indicator (EI) and two income indicators [a factor profitability indicator (FPI) and a comparable income indicator (CII)] expressing the ability to remunerate the entrepreneur's production factors at their opportunity cost and the farm's income capacity have been used in a principal component analysis (PCA) to build an economic sustainability index (SI). The index was used to describe Italian farms' economic sustainability levels but was also the cue to discuss problems related to identifying economic sustainability thresholds and the trade-off between efficiency and income components.

Organic farms should, by definition, place particular emphasis on the protection of agricultural soils, landscape care and activities aimed at producing high-quality agricultural products. However, when joining this production system, the farms face many challenges in order to make these contributions to society at the expected level. The main aim of the study is to determine the scale of disproportions in production effects achieved by farms between organic and conventional production systems, taking into account the quality of natural management conditions. An equally important goal is to determine the factors in Polish agriculture that determine whether to conduct this production system. The paper aims to indicate the direction of development of organic farming in the EU, including Poland, based on the Eurostat data for 2012–2020. It was noted that the current development of the organic farming sector in EU member states has been at different rates. In Poland, its development strength largely depends on the presence of ANCs. Nearly ¾ of organic utilized agriculture area (UAA) is located in communes with a large share of them. Organic farms achieve lower production effects in comparison to conventional farms, and their disproportions also depend on the quality of natural farming conditions. In Poland, the personal competences of farmers are also an important determinant in joining organic farming.

The aim of the study is to determine the impact of the EU Common Agricultural Policy (CAP) subsidies on farm efficiency, depending on farm economic size. Although the impact of subsidies on efficiency is already relatively well recognised, earlier studies were focused on identifying this issue rather than explaining the variation in its intensity. Typically, the analysis of variation by type of production and country was conducted with microeconomic data. Our survey is based on data from the Farm Accountancy Data Network (FADN) aggregated at the regional level, for farms representative for particular economic size classes. In the survey, we apply stochastic frontier analysis and \"true\" fixed-effects model. The results of the research confirm the hypothesis that the impact of subsidies on efficiency depends on the size of farms. Statistically significant, stimulating effect of subsidies was identified only in the group of the largest farms. Such results put into question the effectiveness of the CAP in stimulating the development of the European Model of Agriculture, and at the same time indicate that in its current form, the policy may interfere with market mechanisms and lead to the phenomenon of \"rent seeking\".

This paper aims to evaluate the technical efficiency and the total factor productivity change of dairy farms in EU countries. Analyses were carried out in order to determine which countries showed the best performance adaptations when the quota regime was relaxed and to evaluate the technical conditions of European farmers at the starting point of the new regime (milk quota abolition). A data envelopment analysis (DEA) was applied on aggregate data related to 22 European countries for the period from 2004 to 2012. The findings suggest that milk farms show small scope for improving efficiency using their own technical input. The estimation of total factor productivity and its components suggest that the European milk sector has suffered a decline in productivity. This means that external factors, independent of the farmers' capacity to use technical inputs, can play a greater role than efficiency in conditioning productivity and profitability in the near future.

Purpose The literature argues on ambiguous impacts of different types of the common agricultural policy (CAP) subsidies on farm technical efficiency (TE). The purpose of this paper is to estimate and analyse the TE and the impact of the CAP subsidies on the TE of wine farms in Hungary using the farm accountancy data network data set in the period 2013–2019. Design/methodology/approach The authors use stochastic frontiers analysis (SFA) models to estimate the TE scores for the Hungarian wine farms with four wine farm-level inputs in terms of agricultural land, labour, capital and intermediate consumption. The TE scores are explained by the CAP subsidies and economic wine farm size. The different SFA models were applied with robustness tests to investigate the drivers of the TE values of wineries. Findings Like for Hungarian farms in general, the distribution of the wine farm structure is a dual with a greater number of smaller wine farms and a smaller number of bigger wine farms. The agricultural land, capital and intermediate consumption are significantly positively associated with the wine farm TE. With higher capital intensity wine farm TE increase. The results imply that the CAP subsidies decrease the TE of the Hungarian wine farms, whereas economic farm size increase. Originality/value To the best of the authors’ knowledge, this is one of the first specific efficiency studies on the wine sector in the Central and Eastern European region and the first one for Hungary to evaluate the TE at wine farm level and to assess the impact of CAP subsidies and economic farm size on wine farm (in)efficiency to apply production technologies and use farm resources. This study is among the first that applied the fixed-effects stochastic frontier model at the wine farm level to measure the drivers of the TE scores.

PurposeThe paper examines the factors that influence the production of cash flows in a sample of Italian farm accountancy data network (FADN) farms to generate information useful for calibrating policies to support farmers' investments.Design/methodology/approachAn econometric analysis on the sample estimates the influence of structural, economic, commercial and financial variables on CAFFE, i.e. the cash flow that includes the payments to the farmer's resources and the free cash flow on equity (FCFE). The econometric problem of endogeneity is treated by adopting the Hausman test to choose between fixed and random effects models. The results for Italian agriculture and its types of farming (TFs) are examined based on the FCFE/capital depreciation ratio, where FCFE subtracts from CAFFE the opportunity cost payments to the farmer's resources. This ratio identifies TFs with problems of sustainability of the production system.FindingsThe results show that increasing the productive dimension, in particular the endowment of farmland and working capital, is still essential to stimulate the production of cash flows of Italian agriculture. Without this growth, increasing the depreciable capital base is ineffective. FCFE does not compensate for depreciation in several TFs, which in various cases could also improve by improving economic efficiency and commercial position.Research limitations/implicationsAssessing the factors that most influence cash flows can help to better calibrate rural development measures to the territories and farming types that most need public support. Our analysis procedure can be applied to all production systems equipped with farm accounting networks; however, the criteria for rewarding farmer resources and calculating the replacement value of agricultural capital need to be better discussed.Originality/valueThe specification of rural development policies rarely takes into account the financial sustainability conditions of farms, as well as the factors that determine them, in defining the support parameters and the selection criteria for funding. Our approach, based on the analysis of FADN data, considers these aspects and provides ideas for better calibrating public support for investments among agricultural territories, sectors and types of farms.

In recent years, the primary sector in Italy and elsewhere has been profoundly affected by climate change and a deep economic crisis, mainly linked to stagnating prices and rising production costs. Because of this situation, we are witnessing renewed interest in alternative agricultural productions, which are characterized by their resilience and sustainability, including medicinal and aromatic plants (MAPs). This sector is characterized by a certain heterogeneity due to the great variety of species and their wide range of uses. Although these characteristics contribute to the sector’s economic success, they also hinder its study due to commodity complexity and limited data availability. At the farm level, the situation is complicated by the fact that MAP cultivation is often embedded in complex cropping systems, and more rarely, is practiced exclusively or predominantly. In light of these considerations, we concentrated solely on the agricultural phase of the supply chain, using data available in the Farm Accountancy Data Network. We aimed to examine the main structural characteristics and economic outcomes of Italian farms that grow MAP, as well as the profitability of some of the species. To ensure accurate species classification, only MAPs exclusively designated for botanical use in the Italian National List were considered. The analysis of farm economic performance indicators (gross output, variable costs, gross margins, etc.) focused mainly on the species most represented in the sample: saffron, rosemary, lavender, oregano, and sage. The results indicate that the total gross output and gross margin show the best performance in the case of saffron (66,200 and 57,600 EUR/ha, respectively) and rosemary (27,500 and 22,000 EUR/ha, respectively). However, for saffron, the biggest cost concerns propagation (purchase of bulbs), amounting to 50% of the variable costs, whereas fertilization ones are particularly high for sage and rosemary.