Management Theory and Studies for Rural Business and Infrastructure Development, Volume 38, Number 4

Effects of agricultural subsidies on income risk in Lithuanian dairy farms

Imre Fertő, Aldona Stalgienė


The aim of the paper is to investigate the effects of agricultural subsidies on income variability of Lithuanian dairy farms. In addition, the observed heterogeneity in income risks across farms and time is explained in terms of farm characteristics. It was employed balanced farm-level panel data of the Lithuanian farm accountancy network (FADN) was used to construct coefficients of variation of five-year gross farm revenues over the period 2010 to 2014. Various econometric models are applied to measure the effect of off-farm income, total subsidies, farm size, and financial immobility on the variability of gross farm incomes. Estimations suggest that agricultural subsidies, liquidity have positive impact on income risk. The age of farmers negatively influences the income risk. There is non-linear relationship between farm size and income risk.

JEL Codes: Q12, Q14.


Keyword(s): income risk, governmental support, dairy farms, robust regression, Lithuania

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Management Theory and Studies for Rural Business and Infrastructure Development eISSN 2345-0355

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