The impact of CAP subsidies on the agricultural enterprises production structure

Krasimir Kostenarov, Angel Sarov

Abstract: The effect of implementing the Common Agricultural Policy (CAP) is a constantly discussed issue among society, politicians, academicians, practitioners and others. The aim of this paper is to test the mathematical model to examine the impact of CAP subsidies on the structure of production in the Bulgarian agricultural enterprise operating in a mountain region. In order to optimize the production structure, complex factors and dependencies are considered. Mathematical model does not allow taking into account informal relationships that do not have quantitative dimensions (habits, traditions, preferences). The results show that CAP subsidies have no impact on the structure of production, but only increase in gross margin and profit. The resulting optimization did not prove the successful applicability of the model in the CAP study. The model is applicable in optimizing production structure, animal feed ration, etc., but must be applied separately. It is not appropriate to apply to study the influence of CAP subsidies on production structure, livestock breeding, labor, plant growing, food ration. The article presents one case from which no conclusions can be drawn about the effects of the CAP subsidies on farms. This is due to the fact that the more criteria from different groups (land, plant, livestock, labor, food rations) are included in the optimization, the more the model strikes for a balance between the created organizational conditions, which is often a prerequisite for compromise solutions to the task significant discrepancies of expectations.

Keywords: agricultural enterprises; CAP; gross margin; mathematical model; production structure

Date published: 2019-02-01