Changes of Income Conditions in Agricultural Sector of EU Member States at the Beginning of 2020s

Abstract

The study analyses income conditions and productivity of agricultural industry in EU-27 during 2015 and 2022. The productivity and profitability in agricultural sector strongly accompany with factor income for annual working unit and entrepreneurial incomes. The study compares agricultural conditions among EU-27 member states in different years in order to describe production and income conditions of agricultural producers according to developing trends of crop output, animal output, output of agricultural industry, total intermediate consumption, agricultural gross valued added, factor income, real income of factors in agriculture per annual working unit, net entrepreneurial income of agriculture, subsidies on product, total agricultural labour force input. Study uses statistical analysing methods based on statistical program for social sciences. Productivity moderately increased in EU-27, because increasing rate of total intermediate consumption was 39% as same as 39% in case of agricultural gross valued added. But increasing rate of real income of factors in agriculture per annual working unit was by 44%, even more than 29% income increase of net entrepreneurial income of agriculture, in spite that total agricultural labour force input decreased by 17%. Productivity moderately increased but profitability of annual working units has more increased for this period.

Introduction

The study analyses the income conditions of the agricultural sector in EU-27 member states for the period of 2015 and 2022 and reasons of their changes within the researched period. The study focuses on the profitability and production efficiency of the agricultural producers including the factor income for annual working unit and entrepreneurial incomes of agricultural producers as firms or companies. The study makes comparisons in fields of changes of agricultural incomes in different years and in cases of agricultural producers among EU member states based on the data base coming from Eurostat (2022, Table 1), (aact_eaa01), (aact_eaa06), (aact_ali01). The analyse covers conditions researched in EU-27 member states, as Belgium, Bulgaria, Czechia, Denmark, Germany, Estonia, Ireland, Greece Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania Luxembourg, Hungary, Malta, Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland and Sweden.
The agricultural production conditions surface some main world wide-side economic crisis resulted by the Ukrainian -Russian war started at the beginning of 2022 mostly in fields of energy and food crisis accompanying with financial crisis. The global economic-energy crisis pressed level of the agricultural income conditions by the increasing production costs and energy cost. In spite that the agricultural and food price levels increased, these price increases cannot mostly cover the production costs and energy costs for the agricultural production.
In this situation agricultural producers need for financial supports from side of the national governmental budgets of the EU member states additionally to EU common subsidies in order to keep the satisfactory level of their incomes and production level including agricultural and food products demanded by national consumers. Some of governments in EU-27 tried to limit the price level of several most important food products and to compensate increasing energy price by financial supports for agricultural producers in order to decrease their income damages. Also, there was a difficulty for agricultural producers that the war just came after the crown virus medical crisis in 2020. The war and this followed by the global economic crisis did not provide enough time for agricultural producers to eliminate the negative influences of the medical crisis on their income conditions.
Improving competitiveness (EC 2023a) determined by the new CAP will strengthen the position of farmers in the supply chain and boost the competitiveness of the agri-food sector:
– improved bargaining power: new rules will reinforce producer cooperation, encouraging farmers to work together and enabling them to create countervailing power in the market;
– market orientation: the new CAP maintains the overall market orientation from the previous reforms, encouraging EU farms to align supply with demand in Europe and beyond;
– crisis reserve: to cope with future crises, the reformed CAP includes a new financial reserve amounting to at least €450 million per year (EC 2023a).
As European Commission declared that the droughts are costing an average of 9 billion euro a year in economic damage to agriculture, energy and public water supply. Antimicrobial resistance linked to excessive and inappropriate use in animal and human healthcare leads to an estimated 33,000 human deaths a year. Global mean crop yields of rice, maize and wheat are projected to decrease -3% to -10% per degree of warming (EC 2023b).
In order that these aims can be implemented the subsidies for agricultural producers, first for the small and medium scale farms should increase more than for large scale farms, which this conception can also help the rural development program to be successful. Some authors declared and emphasized importance of support to increase for small and medium scale farms. These farms surface their declining economic conditions. Therefore, some authors wrote that small farms lag behind large ones in both productivity and technical efficiency (Čechura et al. 2022). In this case small farms may have a wider unfavourable impact on their socio-economic conditions (Kremmydas and Tsiboukas 2022). Grochowska et al. (2021) declared that the EU agricultural policy mostly strength farm income inequalities and instruments, such as capping, and the degressive will only change this situation if the CAP stops linking the payments to the agricultural land (also Gioia 2017).
But some authors emphasized as a negative process in case of Czech Republic, that in cases of large farms, new CAP financial support system may cause their formal division into smaller farms, as Appel et al. (2019) claimed, which is not advantageous in terms of their economic performance (Svobodová et al. 2022). Some other authors emphasize the important role of family farm, not simply large, medium or small one. Volkov et al. (2019) declared that family farms form the most vulnerable subsector the agricultural sector. Based on their opinion that depth of problem is that there is no clear boundary and methodology establishing boundaries between small, medium and large farms.
As the statistical data show that Germany and France strengthened the subsidies on product first for the entrepreneurial incomes by 237% and 71%, while they decrease support for the real income of factors in agriculture per AWU (Table-1).
In case of a difficult crisis the international financial situation, national development banks and government-owned financial institutions are, which use public funds for economic development including agricultural industry, must apply the rules of public finances in the appropriate form of implementation (Nyikos-Kondor 2022). The war introduced global food and energy crisis, on which Garai-Fodor et al (2022a) (2022b) focused, which could be solved by investment in agricultural sector also by supporting family farmers to decrease the negative influence of the global crisis resulted by the war. In Hungary the public funds should follow favourable micro-economic effects on enterprises also in agricultural sector, in order to avoid the more financial difficulties for them (Nyikos et al 2020). Csiszárik-Kocsir (2022) focused on the importance of the digital space in the 21st century in order to create the perspective future banking system. The financial conditions are strongly connecting with operation of the bank sector even financing agricultural sector additionally to subsidies of EU and national budgets.
Our opinion is that as the above-mentioned authors declared, the Hungarian agricultural industry needs for financial subsidies either from EU or Hungarian central governmental budget accompanying with developing innovative technologies focusing on better productivity and profitability for annual working units and entrepreneurs avoiding more economic and food crisis.
Hypotheses can be summarised in several aspects based on the profitability and productivity, which are as follows:
From point of view of profitability, it is proofed that the agricultural gross valued added at basic price (AGVAd5) could increase factor income (FactorIn6) for agricultural producers in EU-27 in the period of 2015 and 2022.
It is proofed that net entrepreneurial income of agriculture (NetEntIn8) can be increased by subsidies on product to increase output of agricultural industry (SubsProd9).
Analyse that the agricultural gross valued added at basic price (AGVAd5) has influence on the change of real income of factors in agriculture per AWU (RFInAWU7).
Analyse that the total agricultural labour force input (ALabIn10) has influence on the change of real income of factors in agriculture per AWU (RFInAWU7).
Analyse that the output of agricultural industry (OutAgrInd3) has correlation with factor income (FactorIn6) in agricultural sector.
From point of view of the productivity analyse that the output of agricultural industry (OutAgrInd3) has considerable correlations with the total intermediate consumption (TotIntCon4) and agricultural gross valued added (AGVAd5).
Analyse the correlations of animal output (AnimalOut2) and crop output (CropOut1) with output of agricultural industry (OutAgrInd3) and total intermediate consumption (TotIntCon4).
Material and Methods
The study uses statistical analysing methods based on the SPSS (statistical program for social sciences) according to Salcedo – McCormick (2017) to apply the methods as correlation matrix among several economic variables as economic features based on the developing trends of crop output, animal output, output of agricultural industry, total intermediate consumption, gross valued added at basic price, factor income, real income of factors in agriculture per AWU (annual working unit), net entrepreneurial income of agriculture, subsidies on product based on the output of agricultural industry and agricultural labour input. The names of different economic variables are given, which are bases for the analysing the income, profitability and productivity in EU-27 for the researched period.
Names of the economic variables:
CropOut1 = crop output, production value at basic price, million euro
AnimalOut2 = animal output, production value at basic price, million euro
OutAgrInd3 = output of agricultural industry, production value at basic price, million euro
TotIntCon4 = total intermediate consumption, production value at basic price, million euro
AGVAd5 = gross valued added, production value at basic price, million euro
FactorIn6 = factor income, production value at basic price, million euro
RFInAWU7 = real income of factors in agriculture per AWU (annual working unit), index,
2015 = 100
NetEntIn8 = net entrepreneurial income of agriculture, index, 2015 = 100
SubsProd9 = subsidies on product based on the output of agricultural industry,
million euro
ALabIn10 = total agricultural labour force input, in percent based on the agricultural labour
input statistics: absolute figures (1 000 annual work units) [AACT_ALI01$DEFAULTVIEW]
Results and Discussion
The study analyses the correlations among the economic variables of EU-27 member states. The statistical data collected from the Eurostat are processed based on the SPSS statistical method, therefore the Table 2 shows the values of correlations among economic variables. If the value is between 0.800 and 1.000 as 80% and 100%, the values among the economic variables are very strong. If the values are between 0.500 and 0.800 (50% and 80%) in these cases the corelations among economic variables are only strong, under value of 0.500 (50%) the correlations among variables are not important for the analyses. In case of negative values of correlations, this means that correlations among variables are inversely proportional to each other.
The agricultural gross value added (AGVAd5) had top very strong correlation by value as 0.935 with factor income (FactorIn6) in agricultural sector in EU-27 within the researched period. This means that when the gross value added increased the factor income increased in the same time.
The second only strong correlation by 0.718 was between output of agricultural industry (OutAgrInd3) and total intermediate consumption (TotIntCon4), which means that if this last one as general intermediate cost for agricultural production decreased naturally the output of agricultural industry can also increase. It should be important to mention that this can mostly happen. The net entrepreneurial income of agriculture (NetEntIn8) had strong correlation with subsidies on product (SubsProd9) by value of 0.689, because the subsidies for them had mostly influences on increasing their income.
The output of agricultural industry (OutAgrInd3) had also strong correlation by 0.671 with the agricultural gross value added (AGVAd5), because if the agricultural production as output increased finally the gross value added could increase. But also, this was important that the total intermediate consumption should decrease or less increase than the increase of output.
The factor income (FactorIn6) in agricultural sector has strong correlation by 0.646 with real income of factors in agriculture per AWU (RFInAWU7), which means that if the factor income wholly increases in agricultural sector-side, naturally the real factor income increases per annual working unit in cases of EU-27 in the same time.
There is a strong 0.595 value in field of correlation between agricultural gross value added (AGVAd5) and real income of factors in agriculture per AWU (RFInAWU7), which means that the increase of gross value added can averagely stimulate the increase of real income of factors for each annual working unit. Also, this is really true, when the gross value-added decreases, the real income of factor for AWU decreases in the same time for the EU-27.
The animal output (AnimalOut2) has strong correlation by 0.591 with total intermediate consumption (TotIntCon4), which shows that the increase of animal out mostly accompanies with increase of total intermediate consumption in EU-27. This provides proof for that much more costly animal production was than crop production.
The animal output has strong correlation by 0.684 with output of agricultural industry (OutAgrInd3) and also the crop output has strong correlation by 0.533 with output of agricultural industry. Both of animal output and crop output have influences on increase of output of agricultural industry, but in spite that animal production is more costly than crop production, the animal production has more intensive influence for increasing agricultural industry than the case of crop production. That is shown by the difference of correlation values in cases of animal output and crop output.
The output of agricultural industry (OutAgrInd3) has strong correlation by 0.525 value with factor income (FactorIn6) in agricultural sector in EU-27, because the more output of agricultural industry can ensure more factor income.
The Table 3 shows the rotated component matrix based on extraction method by principal component analysis. The component-1 consists of three economic variables as economic features of the EU-27 member states, namely factor income (FactorIn6), agricultural gross valued added (AGVAd5) and real income of factors in agriculture per annual working unit (RFInAWU7). The component-2 consists of other three economic variables, namely animal output (AnimalOut2), total intermediate consumption (TotIntCon4) and output of agricultural industry (OutAgrInd3).
In the Figure 1 economic variables of component-1 are lying at the “X” horizontal line in coordinate system and the economic variables of the componenet-2 are lying at the “Y” vertical line of the coordinate. In case of the Figure 1 in the positive sector the economic variables are increasing or little decreased, but in the negative sector the economic variables are decreasing or little increasing bases on the statistical analyses and the coordinate system. The Figure -1 provides the compare among EU member states based on their economic features lying at lines of the coordinate system.
In the first quarter of the coordinate system (up-right side) as positive sector, the economic variables/features of EU member states increase. This means that in the first sector the factor income (FactorIn6), agricultural gross valued added (AGVAd5) and real income of factors in agriculture per annual working unit (RFInAWU7) at “X” line generally increased, or little decreased, while the animal output (AnimalOut2), total intermediate consumption (TotIntCon4) and output of agricultural industry (OutAgrInd3) also increased or little decreased at “Y” line in cases of Estonia, Ireland, Czechia, Luxembourg, Latvia, Poland, Austria and Croatia as EU member states. This means that increasing economic conditions generally were favourable in these member states, because income conditions and the agricultural output even in animal production could be favourable, in spite that the total intermediate consumption increased or little decreased for the period of 2015 and 2022. In this country-group Ireland was the most favourable in field of agricultural gross valued added increase by 104% as first in all EU-27, in this field based on increasing subsidies on product by 130% as the second biggest increasing rate for subsidies after Slovakia by 283% increasing subsidy in all EU-27 in the researched period. After Ireland, the Germany implemented second biggest increase by 100% in field of gross value added with decreasing subsidies by one percent in the same period. Also, the total intermediate consumption increased by 15% in Germany, while in Ireland increase of this field was 55%. Germany had the lowest increase in the field of total intermediate consumption in all of EU-27 in the same period. The total intermediate consumption considerably increased in Poland by 78% and in Estonia by 77%, which were after Lithuania by 92% in all of the EU.
In the second quarter of coordinate system (up-left side) factor income (FactorIn6), agricultural gross valued added (AGVAd5) and real income of factors in agriculture per annual working unit (RFInAWU7) at “X” line generally decreased, or little increased, while other economic variables increased or little decreased at “Y” vertical line in cases of Lithuania, Spain, Belgium, Netherlands, Hungary, Portugal and Slovenia. In this sector Lithuania had the most favourable
increasing rate in economic variables according to the “Y” and “X” lines, because the agricultural gross value added increased by 61%, while the other EU member states in this sector had less increase in this field, and even in Slovenia this decreased little. In spite that Lithuania had the top highest increase in field of the total intermediate consumption, the agricultural gross value added (AGVAd5) increase had real important increasing rate by 61%. The positive result of gross value added could be implemented by decreasing agricultural labour input by 21% more than EU average level, and large increase in field of subsidies on product by 62%, which was after Slovakia by 283% increasing rate, Ireland by 130% and Croatia by 77% in the researched period. In Lithuania the increasing subsidies on product and decreasing labour input led to the 36% increase in real factor income per AWU, as first in this second quarter, but less than 44% average level of the EU-27 in the same period.
In spite that in Hungary the agricultural production – first the animal output – has increased by 50% for the researched period considerably more than 40% average rate of EU-27, and the crop output realised 33% closed to 40% of average level of EU-27. In Hungary output of agricultural industry implemented 38% growing rate closed to 39% of EU-27 average level, the agricultural gross value added increased only by 2%, better than decreasing rate 25% in Malta and decreasing rate 1% in Slovenia. The EU-27 averagely realised 39% in the same period. Generally the result of the Hungarian agriculture was not so unfavourable, because gross value added of Hungarian agriculture was 77% of Austria by the end of 2022 and 119% of Austria in 2015 in this field. Also, it should be mentioned that gross value added of Hungarian agriculture has been better than Portugal in this field for all of the researched period, because in 2015 in Portugal 2878 million euro of gross value added (AGVAd5) and in Hungary 3224 million euro, while in 2022 in Portugal 3175 million euro and in Hungary 3296 million euro little more than one of Portugal in this field. This is very clearly seen that the gross value added in Hungary has moderately been developing. In Hungary the number of agricultural labour input sharply decreased by 30% as the second biggest decrease in EU-27 after Bulgaria by 47. In this field the third decrease was in Poland by 26%, then in Romania by 25%, in Latvia by 24%, in Slovakia 23%, in Lithuania by 21% and in Estonia by 19%. This means that the number of agricultural labour input mostly decreased in the new EU member states in Central East European countries, which was over 17%, as average decreasing rate of EU-27.
In Hungary by the end of 2022 the considerable decrease of number of agricultural labour input and little increase of the subsidies on product by 12% could contribute to increasing rate of real income of factors in agriculture per AWU by 27%, while the factor income generally increased only by 11%. More real income of factors per AWU could be against the less increase of factor income, because the net entrepreneurial income of agriculture has decreased by 22% for the researched period. In Hungary the subsidies on product were mostly paid for innovative investment of agricultural production in order to increase the animal output and little less for crop output. In Hungary the increasing trend of the agricultural gross value added was pressed by the considerable increasing rate of the total intermediate consumption by 61% over the 39% EU average level. The total intermediate consumption in Hungary was less only than in Lithuania by 92%, in Poland by 78%, in Estonia 77%, in Spain by 67%, in Portugal by 64% and in Belgium by 62%. In Hungary increase of the total intermediate consumption was mostly resulted by increasing price of animal feed, fertilizer and energy even in the world market. Naturally the global warming resulted considerable drought weather periods sometimes, which were not favourable for the Hungarian agricultural production. The drought weather resulted more expensive irrigation for the producers.
In Netherlands subsidies on product increased by 59% of which considerable part was spent for the agricultural modernization mostly for increasing animal output. Also in Netherlands the gross value added little increased by 17% comparably to 39% of average level of the EU-27. Also, the agricultural labour input increased by 7%, which partly could contribute to decrease by 14% in field of real income of factors in agriculture per AWU and by 9% in field of net entrepreneurial income of agriculture.
In Austria in spite that the subsidies decreased by 25% and total agricultural labour force input decreased by 3% accompanying increasing total intermediate consumption by 47%, the agricultural gross value added increased by 58%, factor income increased by 61%, increase by 40% in field of real income of factors in agriculture per AWU and by 45% in field of net entrepreneurial income of agriculture. Also, in Austria total intermediate consumption increased by 47% mostly same as 45% in the Netherlands in the same period. The Netherlands considerably used the increasing supports on product for remaining the advanced innovative agricultural production by decreasing rate in fields of incomes for AWU and entrepreneurs, companies and firms, while in Austria subsidies on product considerably decreased, but incomes were increasing, in spite that the output of agricultural industry increased by 51%, more than 34% in Netherlands by the end of 2022. Also, it should be mentioned that in contrast Austria’s gross value added increased by 58% compared to Netherlands only by 17% by the end of 2022.
In the third quarter of coordinate system (under-right side) factor income (FactorIn6), agricultural gross valued added (AGVAd5) and real income of factors in agriculture per annual working unit (RFInAWU7) at “X” line generally increased or little decreased, while the animal output (AnimalOut2), output of agricultural industry (OutAgrInd3) and the total intermediate consumption (TotIntCon4) decreased or little increased at “Y” line in cases of Romania, France, Bulgaria, Germany and Denmark. In this quarter France had lowest increase by 47% in field of agricultural gross value added, which was highest level in Germany, in Denmark by 90%, in Bulgaria by 79% and in Romania 66%. But in France the total intermediate consumption increased by the second lowest level by 16% after Germany by 15% in all of EU-27. Therefore, France could realise 71% increase in net entrepreneurial income of agriculture, average level of EU by 29%; and in France by 49% increase in real income of factors in agriculture per AWU, in EU by 44% and in France 51% increase in factor income, in EU by 38%. In spite that in France subsidies on product decreased by 6% and output of agricultural industry increased only by 28% increase, France could considerably increase income positions of agricultural producers comparably to the average level of EU-27. But in this quarter the factor income of other four member states increased more than in case of France.
Bulgaria had generally been more favourable economic conditions for agricultural industry than economic conditions of Romania for the researched period. In Bulgaria the output of agricultural industry increased by 64% more than by 50% increase in Romania. Therefore, the agricultural gross value added increased by 79%, two times more than 39% as the average level of the EU-27, and more than 66% in Romania. This result could be realised in Bulgaria, because crop output increased by 88% opposite to the 62% in Romania. Also, in spite that subsidies on product in Bulgaria decreased by 36%, but total agricultural labour force input decreased more by 47%, almost half of labour force in this sector, which was the first biggest decrease in all of the EU-27 in this field. These two factors in Bulgaria, namely agricultural gross value-added increase and labour force input decrease, could essentially contribute to create a favourable increase in income conditions, namely increase in factor income by 92%, in real income of factors in agriculture per AWU by 142% at the highest level in all EU-27- three times more than average level of EU-27 by 44%, in net entrepreneurial income of agriculture by 31% opposite by decreasing trend 45% in Romania. In Romania one percent decrease in the subsidies on product cold not stimulate the intensive increase for the output of agricultural industry and income conditions against results of Bulgaria in these fields. Decrease in total agricultural labour force input by 25% in Romania, which was fourth considerable decrease and more than average decreasing level of the EU-27, after Bulgaria, Hungary and Poland. But in Romania decrease even one percent in subsidies on product could not make favourable influence on increasing incomes even in field of real income of factors in agriculture per AWU, where decrease was by 10% as same as by 10% in field of factor income.
In cases of EU member states in this third quarter of the coordinate system Bulgaria and Romania had less favourable conditions for agricultural industry comparably to other three EU member states, because total intermediate consumption of two countries has considerably increased more than in Germany, France and Denmark. Also, decreasing subsidies on product in Bulgaria and Romania could not stimulate the innovative agricultural prosperity. The decrease of the total agricultural labour force input could only help Bulgaria to increase the income conditions, but in case of Romania decrease in this field could not be enough for favourable influence on increase in the income conditions.
In cases of Germany, Denmark and France their highly developed agricultural industry accompanying with low level increase in field of total intermediate consumption, highly level increasing rate in field of agricultural gross valued added and by less decrease of total agricultural labour force input than in EU-27 could realise more productivity and more profitable conditions than Bulgaria, Romania and average level of EU-27. Therefore, these three EU member states implemented highest developed trend in field of agricultural industry in EU-27 for the researched period. Their productive production could ensure favourable income conditions and not first by decreasing the total agricultural labour force input. (Table 1; Table 2; Figure 1) (aact_eaa01), (aact_eaa06), (aact_ali01).
In the fourth quarter of coordinate system (under-left side) factor income (FactorIn6), agricultural gross valued added (AGVAd5) and real income of factors in agriculture per annual working unit (RFInAWU7) at “X” line generally decreased, or little increased, while the animal output (AnimalOut2), total intermediate consumption (TotIntCon4) and output of agricultural industry (OutAgrInd3) also decreased or little increased at “Y” line in cases of Sweden, Italy, Cyprus, Finland, Slovakia, Greece and Malta.
In Slovakia total agricultural labour force input sharply decreased by 23% in country-group of this quarter and subsidies on product increased by 283% at top level of EU-27, which could have contributed to increase net entrepreneurial income of agriculture by 422% also at the highest level more than four times in EU for the researched period. The EU increasing average level in this field was only 9%. It should be mentioned that additionally to the subsidies in Slovakia the tax policy for the companies were more favourable averagely than in EU, which ensured considerable increase even for the net entrepreneurial income of agriculture.
Also, the considerable support on the product could stimulate the increasing income positions for agricultural producers in fields of factor income by 31% and in real income of factors in agriculture per AWU by 43%, which were closed – or not far – to the average level of EU-27. By the considerable increase in field of subsidies on product Slovakia could implement 34% increase in agricultural gross value-added in spite that total intermediate consumption increased by 24%, but the animal output increased only by 3% at the lowest level and also, Greece had second lowest level increase by 7% in EU-27. Generally, the intermediate consumption was higher in animal husbandry than in crop production in these two countries. In Slovakia subsidies on product were considerable spent mostly for the prosperity of crop production to increase crop out by 41% little more than average level of EU-27 as by 40%.
In Finland and Sweden, the decrease in agricultural labour force input was considerable by 12% and 5% but under the average level of EU. Also, subsidies on products were only several increasing percents by 3-4%, which was seem as enough to contribute to increase crop output by 64% in Finland and 47% in Sweden, but the large increase in field of total intermediate consumption by 42% in Finland and by 45% in Sweden could be compensated by the low-level subsidies. The low level of subsidies accompanying with large increasing trend in intermediate consumption could only ensure moderate increase in field of gross value-added by 13% in Finland and by 20% in Sweden comparably to average level of EU-27 in this field. Also, little increasing rate was in factor income by 14% in Finland and by 19% in Sweden. These reasons resulted 14% increase in Finland and 11% in Sweden in field of real income of factors in agriculture per AWU and 13% increase in Finland and 9% in Sweden in field of net entrepreneurial income of agriculture within researched period. In Finland and Sweden, the agricultural production is highly developed comparably to other member states, therefore the little or moderate increase in agricultural economic conditions does not means as economic decline in this sector.
Generally, Italy and Greece decreased total agricultural labour force input by 18% in Greece and by 11% in Italy with more increasing subsidies on product by 33% in Greece and by 31% in Italy. In spite that the increasing subsidies were considerable in both of countries the increasing rate of the croup output and animal output were deeply under the average level of EU-27 by 27% in crop output and by 29% in animal output in Italy, while by 31% in crop output and 7% in animal output in Greece. Also, the strongly increasing rate of intermediate consumption was by 44% in Italy, which resulted only 17% in gross value-added. In Italy policy-makers wanted to create balanced moderate increase in income conditions, therefore the factor income increased by 26% and real income of factors in agriculture per AWU increased by 29% in order that they could realise 21% increase in field of net entrepreneurial income of agriculture. Opposite to income conditions in Italy, in Greece increasing subsidies on product provided to increase more favourable income conditions in field of real income of factors in agriculture per AWU was emphasized by 51% than in field of net entrepreneurial income of agriculture by only 13%, while the factor income increased by 19% less than in Italy. In Greece the real income of factors in agriculture per AWU was dominated than entrepreneurial income.
In case of Cyprus the total agricultural labour force input increased by 12% as the biggest increasing rate in EU-27 accompanying with decreasing support on product by 6%, but the increasing rate of net entrepreneurial income of agriculture was by 37% and by 38% in increase of factor income. Therefore, in Cyprus the real income of factors in agriculture per AWU had increased only by 12%, which was less favourable than the previously mentioned two income conditions for the researched period. In Cyprus the mountain areas were not favourable conditions for increasing crop output, therefore, the animal output increase by 40% was dominated against the crop production by 7% increasing rate.
The summarised data view shows that in 2022 Germany, France and Italy provided 51% of agricultural gross value added of EU-27, but only 28% of all agricultural labour farce of EU-27 produced these gross-value added value. This means that a little more than one fourth labour force produced more than half of total agricultural gross value-added in EU-27 in this year, which shows more productivity of agricultural production of these three EU member states than productivity of other EU member states at average level.

Conclusions

The productivity is basically determining the profitability for the survival of the agricultural producers in EU-27, which could be realised by the innovative production development, as the 40% increasing trend was realised in the crop production and animal production. The 39% increasing rate was in field of the output of agricultural industry based on the prosperity of agricultural production. The difficulty for the agricultural sector in EU-27 was the 39% increase of the total intermediate consumption, because of the latest global energy crisis, Ukrainian war and previously the medical crisis coming from crown virus pandemic. In spite that these economic, medical and energy crisis the agricultural gross valued added at basic price could increase by 39% rate as same as by 39% in increasing rate of total intermediate consumption. The factor income increased only by 38%, which was little less rate of agricultural gross valued added in the same time. Additionally, to the above-mentioned difficulties, net entrepreneurial income of agriculture increased only by 29%, which was considerably under the level of gross value-added increasing rate. The increasing rate of factor income was less by 1% comparably to the increasing rate of the agricultural gross value added within the researched period.
Finally, it can be declared that the agricultural production indicated by the data of increasing rate considering agricultural gross value added covered the increasing rate of the total intermediate consumption. Therefore, the factor income increasing rate was closed to the rate of gross value added and total intermediate consumption (Table 1; Table 2), (aact_eaa01), (aact_eaa06), (aact_ali01).
Also, the profitability can mostly be ensured by considerable decreasing of the total agricultural labour force input, which was 17% in the researched period. This could mostly result 44% increasing rate in field of real factor income for annual working unit, of which number decreased by 1542 thousand units between 2015-2022. Naturally also, little increasing subsidies on product based on output of agricultural industry also contributed to this considerable increasing rate for the real factor income for annual working unit. It should be mentioned that the entrepreneurs or agricultural companies, firms paid the increasing salaries for their agricultural employed workers, as annual working units, in spite that their incomes had not wholly increased as same as increase of the total intermediate consumption was in agricultural sector. The increasing salaries paid by the entrepreneurs could contribute to decreasing rate of incomes at entrepreneur level.
The subsidies on product aimed at increasing the developing trend for crop output and animal output by 40%. By these agricultural economic branches these subsidies aimed at increasing rate in field of agricultural gross value-added based on possible little increasing total intermediate consumption to increase to income conditions, as profitability of agricultural industry. The strategic aim of EU agricultural policy is to increase the innovative investment in field of fixed assets and by this agricultural prosperity the productivity should be first and based on this one the profitability can be realised.
According to the hypotheses from point of view of profitability, the agricultural gross valued added at basic price (AGVAd5) could increase factor income (FactorIn6) for agricultural producers in EU-27 in the period of 2015 and 2022. Also, net entrepreneurial income of agriculture (NetEntIn8) can be increased by subsidies on product based on output of agricultural industry (SubsProd9). The research proofed that the agricultural gross valued added at basic price (AGVAd5) has strong influence on the change of real income of factors in agriculture per AWU (RFInAWU7) and number of the total agricultural labour force input (ALabIn10) has strong influence on the change of real income of factors in agriculture per AWU (RFInAWU7). The output of agricultural industry (OutAgrInd3) has strong correlation with factor income (FactorIn6) in agricultural sector. From point of view of the productivity analyse of the research provided proof that the output of agricultural industry (OutAgrInd3) had considerable strong correlations with the total intermediate consumption (TotIntCon4) and agricultural gross valued added (AGVAd5). The analyse had strengthened that animal output (AnimalOut2) and crop output (CropOut1) strong had strong correlations with output of agricultural industry (OutAgrInd3) and total intermediate consumption (TotIntCon4) in EU-27 for the researching period. Therefore, all of the hypotheses are accepted based on the results of the research.
For the future prosperity of the agricultural industry of EU-27 the most important issue is the innovation process for the production in order that agricultural producers can be competitive on the EU single market and international markets, and remain their productivity accompanying with profitability. The productivity ensures the profitability and the profitability ensures the individual interests for agricultural producers – either farmers or companies, entrepreneurs – in order not to escape from agricultural production to ensure food and agricultural product supply. Also, the agricultural industry should be concentrated even by decreasing number of annual working units additionally to increasing important support for agricultural producers.

References

Appel, F. – Heinrich, F. – Balmann, A. (2019): Structural Implications of the CAP Reform after 2020 – The German Case, 165th Seminar, Apr 4-5, 2019, Berlin, European Association of Agricultural Economists.
Čechura, L. – Žáková, Kroupová Z. – Lekešová, M. (2022): Productivity and efficiency in Czech agriculture: Does farm size matter? Agricultural Economics – Czech, 68: 1–10.
Csiszárik-Kocsir, Ágnes (2022): The Present and Future of Banking and New Financial Players in the Digital Space of the 21st Century. Acta Polytechnica Hungarica Vol. 19, No. 8, 2022, pp. 143-160
EC (European Commission, 2023a): The new common agricultural policy: 2023-27. The new common agricultural policy will be key to securing the future of agriculture and forestry, as well as achieving the objectives of the European Green Deal. Available at: https://agriculture.ec.europa.eu/common-agricultural-policy/cap-overview/new-cap-2023-27_en
EC (2023b): Green Deal targets for 2030 and agricultural production studies. February 2022 #EUGreenDeal. Available at : FarmToFork_ComparisonTable_A4_RV_Fev_2022_01.indd (europa.eu)
EUROSTAT (2022): Economic accounts for agriculture – values at current prices online data code: AACT_EAA01 last update: 19/12/2022 11:00 view: DEFAULT https://ec.europa.eu/eurostat/databrowser/view/aact_eaa01/default/table?lang=en at basic price
Garai-Fodor, M. – Popovics, A. – Csiszárik-Ko­csir, Á. (2022a): The perception of Hungarian food by consumer segments according to food purchasing preferences based on primary research results. PLOS ONE 17 : 8 pp. 1-19., 19 p. (2022), DOI Scopus https://doi.org/10.1371/journal.pone.0273023
Garai-Fodor, Mónika – Szemere, Tibor Pál – Csiszárik-Kocsir, Ágnes (2022b): Investor Segments by Perceived Project Risk and Their Characteristics Based on Primary Research Results, RISKS 10:8p. 159, 13 p. DOI WoS Scopus https://doi.org/10.3390/risks10080159
Gioia, A. (2017): Small farms in Europe: Time for a re-definition. Eco Ruralis, 17: 71–88.
Grochowska, R. – Pawłowska, A. – Skarżyńska, A. (2021): Searching for more balanced distribution of direct payments among agricultural farms in the CAP post-2020. Agricultural Economics – Czech, 67: 181–188.
Kremmydas, D. – Tsiboukas, K. (2022): Redistribution and the abolishment of historical entitlements in the CAP Strategic plans: The case of Greece. Sustainability, 14: 735.
Nyikos, Gy. – Béres, A. – Laposa, T. (2020): Micro-economic effects of public funds on enterprises in Hungary. Regional Studies Regional Science, 7(1) pp. 346–361. https://doi.org/10.1080/21681376.2020.1805351
Nyikos, Gy. – Kondor, Zs. (2022): National Development Banks in Europe – A Contribution to Sustainable Finance. Central European Public Administration Review, 20(1), pp. 135–165, 2591-2259/© 2022 University of Ljubljana, Faculty of Public Administration. DOI: https://doi.org/10.17573/cepar.2022.1.06
Salcedo, J. – McCormick, K. (with Peck J., Wheeler A., 2017): SPSS Statistics for Data Analysis and Visualization. Publisher: Wiley, first edition, ISBN 978-1119-003-557, p. 489.
Svobodová, E. – Redlichová, R. – Chmelíková, G. – Blažková, I. (2022): Are the agricultural subsidies based on the farm size justified? Empirical evidence from the Czech Republic. Agriculture, 12: 1574.
Volkov, A. – Balezentis, T. – Morkunas, M. – Streimikiene, D. (2019): Who benefits from CAP? The way the direct payments system impacts socioeconomic sustainability of small farms. Sustainability, 11: 2112.

Dr. Csaba Lentner, CSc, Habil, Professor, Director
University of Public Service, Budapest, Faculty of Governmental and International Studies,
Kálmán Széll Public Finance Pub, Ludovika tér 2., H-1083 Budapest, Hungary

Dr. Sándor J. Zsarnóczai, CSc, Habil, Leading Researcher
University of Public Service, Budapest, Faculty of Governmental and International Studies,
Kálmán Széll Public Finance Pub, Ludovika tér 2., H-1083 Budapest, Hungary
Óbuda University, Rejtő Sándor Faculty of Light Industry and Environmental Engineering Institute of Environmental Engineering, Doberdó u. 6, H-1034 Budapest, Hungary,