Analysis of the impact of subsidies on farm performance using a mixed effects model

Agricultural subsidies are a key element of agriculture and have a major impact on international trade.In the European Union, the policy supporting agricultural incomes is called the Common Agricultural Policy, which is a complex system involving various instruments.The impact of this policy on the economic performance of farms is, therefore, an interesting topic, especially for policymakers.Czech agriculture has undergone major policy changes that have affected its position in the national economy and its importance at the regional level.Differences in natural conditions, as well as economic and social inequalities, continue to affect the level of gross agricultural production.Using a mixedeffects model, this study analyzed data from 10 South Bohemian farms (2012)(2013)(2014)(2015)(2016)(2017)(2018)(2019)(2020)(2021).Results indicate that subsidies have a positive but statistically insignificant effect on economic performance, while assets positively and significantly contribute to profitability.Conversely, liabilities and investments in long-term assets negatively impact economic performance.These findings highlight the importance of asset management and cautious debt strategies for farm sustainability.