Articles - year 2019

Analysis of economic risk in potatoes cultivation

A number of variables influences potatoes growing, including natural conditions, used growing technologies and market conditions. The most important parameters for the production of potatoes crops are yield, farmer’s price, subsidies and costs. All these parameters can change over time. This means that managers of farms must constantly assess the key parameters affecting the economic outturn and analyse the degree of risk of their achievement. This article analyses the economic risks of potatoes cultivation based on statistical data obtained over the last 10 years. The Monte Carlo stochastic simulation method was used to analyse the risk of gross profits. The results of the calculations confirmed the considerable variability and risk of growing potatoes in the climate conditions of the Czech Republic in general, and especially regarding the first early potatoes and potatoes for starch production.

Humpál, J., Čížek, M., Kafka, M., Mimra, M.

Agricultural Economics. Volume 65, Nr. 7, p. 331-339, 2019, ISSN 0139-570X

https://www.agriculturejournals.cz/web/agricecon.htm?type=article&id=319_2018-AGRICECON

 

Approaches to estimation the farm-level economic viability and sustainability in agriculture: A literature review

Estimation of farm economic sustainability and viability became more topical when redesigning the Common Agricultural Policy which should stabilise farm income and make agribusiness more viable and sustainable (typically in Czech areas facing natural constraints). The key question is how to calculate the income of farms or farm households not only to survive but also to grow sustainably. The article summarises and compares knowledge from 51 studies to provide a comprehensive discussion on different ways how to measure economic viability and sustainability to set income support for farms in the areas with natural constraints optimally. The authors found family farms and off-farm income as important limitations of FADN database (Farm Accountancy Data Network) for evaluation of the economic sustainability of farm household. Moreover, some financial ratios (Return on Assets – ROA and assets turnover) are not suitable viability indicators for farms with a high share of hired land (typically large legal entities). Joining family farms and legal entities, the authors recommend using modified Farm Net Value Added (MFNVA) allowing for opportunity costs of own land and non-land assets. The average wage in the economy or region is a better proxy for opportunity labour costs of unpaid work rather than average agricultural wage.

Hlavsa, T., Soukupová, K., Špička, J., Štolbová, M.

Agricultural Economics. Volume 65, Nr. 6, 2019, p. 289-297, ISSN 0139-570X

https://www.agriculturejournals.cz/web/agricecon.htm?type=article&id=269_2018-AGRICECON

 

Are Wine Producers With Subsidies More Technically Efficient?

The article analyses the technical efficiency of enterprises producing wine in the Czech Republic in the context of provided subsidies. In this paper only the effect of Rural Development Programme subsidies (measure 1.1.3 in 2007–2013 and 4.2.1 in following RDP 2014–2020) are analyzed, where wine producers belong to the main recipients. We used unbalanced data set for the time period from 1998 to 2016. The main aim of this paper is to evaluate the technical efficiency of wine producers and to figure out whether there are differences between supported and non-supported firms – according to the size of enterprise and region. The true fixed effect model was used to do the analysis. Supported producers in general were more technically efficient, but this result was not statistically significant. By region distribution, supported firms were also more efficient, but not significantly. The same result was true for the distribution according to the size. To summarize, the effect of support in this sector is not significant.

Náglová, Z., Šimpachová Pechrová, M.

Central European Business Review. Volume 8, Nr. 1, p. 1-14, ISSN 1805-4854

https://cebr.vse.cz/artkey/cbr-201901-0001_are-wine-producers-with-subsidies-more-technically-efficient.php

 

Asymmetric price transmission analysis in the Czech pork market

The paper examines the characteristics of farm, processor and consumers (retail) price relationship within the Czech pork market. Last years the farm prices of pork meat are volatile comparing to processors and consumers prices. In these conditions the analysis of the character of price transmission becomes an actual issue. The paper employs the pre-cointegration, cointegration approach and the coefficients of price transmission elasticity for testing asymmetry in the transmission of farm pork price changes to changes in the processor and retail price. In this analysis monthly farm, processor and retail prices of pork and pork products encompassing the January 2006 to September 2017 were used. Empirical results of applicated approaches suggest that in the short-run, the processor’s and consumer’s price responds differently to the increase and decrease of farm price and processor’s price, accordingly. Moreover, the evidence of different speed of price long-run adjustment was proved. The results proved the existence of price transmission asymmetry, and besides, this fact is pronounced more significant in the second stage of agri-food chain, i.e. in the processor-retailer relationship.

Rudinskaya, T.

Journal of Central European Agriculture, Volume 20, Nr. 3, 2019, p. 986-994, ISSN 1332-9049

https://jcea.agr.hr/en/issues/article/2278

 

Economics in poultry farming

The economy of fattening chickens was, on average, loss-making in all years for the observed group. Unfavourable results were influenced by low realization prices that did not cover production costs. The economic results of laying hen breeding are only indicative due to small number of respondents. However, based on these results, the production of table eggs was not profitable as well, apart from year 2017, when the favourable selling price contributed to profitable egg production. Subsidies to the poultry sector has significantly improved the economy of fattening chicken and egg production. The fattening of chickens was profitable with the subsidy in the years 2016-2018, the production of eggs only in the years 2017-2018.

Boudný, J.

Náš chov. Volume 2019, Nr. 10, 2019, p. 73-75, ISSN 0027-8068

 

Economics of pig meat production – position of the Czech Republic in Europe

The paper deals with international comparison of pig production costs and revenues in selected European countries in years 2015-2017. The average results of the EU countries were compared with the best 1/3 companies in Czech Republic, Denmark and France. Main cost items and natural productivity indicators were explored to clarity the differences among EU countries. In 2016 and 2017, the economy of pig breeding improved in all monitored EU countries, costs decreased year-on-year and prices increased. Most of the monitored countries made a profit in 2017, apart from the Czech Republic, which reported a loss in all years. However, in the main cost items, the Czech Republic was competitive, showing costs at the level of average costs of EU countries or lower. Other costs remain represented by production and overheads costs, which significantly exceed the EU average and are a potential source of savings. Other reserves in the Czech Republic can be found in labour productivity and feed conversion in pig pre-fattening. Intensity indicators (sow productivity, gain, feed conversion) improved in all countries, which contributed to the annual growth of sow meat production. The Czech Republic achieved above-average parameters of sow productivity, meat production per sow and in increments in pre-fattening and fattening pigs. The Czech Republic is one of the countries in which the performance of sows has increased at the fastest pace in the last 5 years of all EU countries, which is a reflection of good breeding work, support for breeding in recovery programs and a steady decline in less efficient companies in the sector due to unfavourable economic situation.

Bobošová, T., Boudný, J., Jochymková, K.

Náš chov. Volume 2019, Nr. 5, 2019, p. 60-64, ISSN 0027-8068

 

Estimation of technical efficiency of Czech farms operating in less favoured areas

This paper deals with the technical efficiency analysis of farms in the Czech Republic. The empirical analysis provides an evaluation of technical efficiency with regard to the farm size, farm specialisation, and farm location. Accounting data of Czech farms from the Albertina database for the years 2011–2015 were used for the analysis. The data were classified by the utilised agricultural area and location of the farm expressed as a less favoured area type from the Land Parcel Identification System (LPIS) database. Research was conducted using the translogarithmic production function and Stochastic Frontier Analysis. The results indicate positive impact of farm size, expressed by utilised agricultural area, on technical efficiency. The analysis of the impact of farm specialisation on technical efficiency verified that farms specialised on animal production are more efficient. The lowest technical efficiency is shown by farms situated in mountainous Less Favoured Areas (LFAs), the highest technical efficiency by farms located in non-LFA regions.

Hlavsa, T., Hruška, M., Rudinskaya, T.

Agricultural Economics. Volume 65, Nr. 10, p. 445-453, 2019, ISSN 0139-570X

https://www.agriculturejournals.cz/web/agricecon.htm?type=article&id=52_2019-AGRICECON

 

Investigation of the Determinants of Market Power on Czech Pork Meat Market

An increasing market concentration in food retailing has generated concerns about the market power of retailers towards consumers and input suppliers. This is especially true for the Czech Republic, which has a CR5 in food retailing greater than 50%. Based on different indicators of food chain and pork meat market with respect to four groups of meat products with low and high value added it was analysed whether the evidence of market power in the Czech pork market exists. Analysis based on a New Empirical Industrial Organization model investigated the degree of market power of meat processing industry. The evidence of market power in meat processing industry is rather weak, although has increasing trend in the last year accompanying by growing market concentration ratio. However, the empirical results suggest that market power of retailing exists towards consumers and towards input suppliers (in particular, in the case of meat products with higher value added).

Rudinskaya, T.

Agris on-line Papers in Economics and Informatics. Volume 11, Nr. 2, 2019, p. 71-80, ISSN 1804-1930

https://ideas.repec.org/a/ags/aolpei/294156.html

 

Investments, Technical Change and Efficiency: Empirical Evidence from Czech Food Processing

This empirical study aims to shed light on the dynamic linkages among investments, technical efficiency and productivity of food processing at a sectoral level. We use data obtained from meat and milk processing firms operating in the Czech Republic. The data set covers a period from 2011 to 2015. Being based on a production function frontier framework and the Divisia index our study is focuses on the estimation of technical efficiency and productivity of Czech Food processing firms in connection with the received investments. The results of the conducted analysis have shown that investments, directed to a production process of meat and milk processing firms operating in the Czech Republic, do have a positive effect on their technical efficiency. Moreover, it provides an opportunity to increase the capacity of raw milk processing. Higher TFP in food processing industry may result in higher TFP in agriculture.

Rudinskaya, T., Kuzmenko, E.

Agris on-line Papers in Economics and Informatics. Volume 11, Nr. 4, 2019, p. 93-103, ISSN 1804-1930

https://online.agris.cz/archive/2019/4/9

 

International comparison of winter wheat cultivation

The aim of this article is to compare the winter wheat production economics in selected European countries in the years 2015-2017. In comparison, typical farms are used. These farms represent a typical crop rotation, acreage, technologies, soil processing and other farm characteristics typical for the country and region. The comparison is based on several indicators - hectare yield, gross margin and economic costs, economic and account profit, operating costs and total land costs. The results are calculated in production unit-tonne or hectare. The impact of decoupled payments on crop profit is analysed too. Czech farms get lower hectare yields and have lower economic costs compared to competitors. The problem is higher operating costs of the South Moravian farm. Therefore, farms should aim to optimize their costs. Decoupled payments positively affect business performance of farms.

Náglová, Z., Remešová, M.

Úroda. Volume 67, Nr. 2, 2019, p. 20-25, ISSN 0139-6013

Subsidies and technical efficiency of Czech food processing industry

At present, the New Common Agricultural Policy for the period 2021–2027 has been currently formulated. Future of the agriculture and food industry is now widely discussed. These sectors play an important role, and it is necessary to maintain their competitiveness and sustainability. In this context, the main aim of the paper is to evaluate the technical efficiency of food processing firms by using Stochastic Frontier Analysis applying True Fixed Effect model on production function. It was identified, that increase of subsidies cause a slight increase in the mean of technical inefficiency. Also, the technical efficiency of the firms without subsidies is higher than in the subsidised firms and differs statistically significantly in the time and also with respect to the region of the firm. To summarise, the effect of subsidies is negative as the obtaining of the subsidies is not related to higher technical efficiency.

Náglová, Z., Šimpachová Pechrová, M.

Agricultural Economics. Volume 65, Nr. 4, p. 151-159, 2019, ISSN 0139-570X

https://www.agriculturejournals.cz/web/agricecon.htm?type=article&id=234_2018-AGRICECON

 

Technical efficiency and its determinants for Czech

Organic farming has become an important part of Czech agriculture. The aim of this study is an evaluation of the technical efficiency of Czech organic farms and determining the main factors, including subsidies, which affect the technical efficiency of both conventional and organic farms. The Farm Accountancy Data Network Czech Republic (FADN CR) database provides sufficient panel data for this kind of research focusing on types of farming with livestock production. The methodological tool used to achieve the aim of this paper is the parametric stochastic frontier analysis, “True” Random Effects model, supposing farms heterogeneity and time variant determinants of inefficiency. The results of the research verified differences in the technical efficiency of organic and conventional agriculture related both to the different farming methods and to the production conditions. The type of farming and the economic size of farms influence the farms’ profitability, economic performance and comparability with conventional farms. The technical efficiency of organic farming is growing over the long term. Farms with growing technical efficiency show a decline in the proportion of operating subsidies to production, irrespective of their classification in quartiles by the technical efficiency estimate.

Fuksová, Z., Kostlivý, V.

Agricultural Economics. Volume 65, Nr. 4, p. 175-184, 2019, ISSN 0139-570X

https://www.agriculturejournals.cz/web/agricecon.htm?type=article&id=162_2018-AGRICECON

 

Selected economic indicators of dairy farms using FADN data

In case o dairy farms, the agricultural producer price of cow´s milk represents the main decisive factor for the creation of the value of livestock production. The highest price of milk was reached in 2014 (9.20 CZK/l). Economic downturn of the dairy sector caused an increase in the number of slaughters and slaughter cows heifers from 2015 to 2016. From a long-term point of view, costs are higher than value of production and profitability is reached mainly due to subsidies.

Döbertová, M., Lamprechtová, S.

Úroda. Volume 67, Nr. 1, 2019, p. 20-24, ISSN 0139-6013

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