Does Being Located In Less-Favored Areas Weaken The Profitability Of Polish Farm Households? Empirical Evidence

Detailed analysis of Hill [1] based on EU FADN data indicate that the level of "incomes of farms in LFAs was lower than those in non-LFAs, even after including the special payments that the former receive." The following question arises as to whether being located on less-favored areas may alter significantly the financial efficiency of farms and whether it is possible to identify such measures that would improve financial efficiency at a farm level and preserve the environmental value of the LFA and implement sustainable development policies. The article proposes an analysis of profitability according to criteria regarding being located on LFA, taking into account the peculiarities of production orientation. This is an important issue, not only from a scientific point of view but also an important element for agricultural policy and the issue of subsidies to agricultural holdings located in areas of environmental constraints. We confirmed that in Poland in 2009-2014 the farms located on LFAs significantly differentiate the financial efficiency of farms and are significantly less profitable assets and use financial resources less effectively than farms located in favorable areas. We also proved that farms located on LFAs that specialize in crop productions are described by the highest profitability.