The Economic Disparity in European Agriculture in the Context of the Recent EU Enlargements

Abstract

The paper investigates the differences of the farm income and its determinants between the old- (EU-15) and new EU member states (EU-12) before and after the EU enlargement. The analysis covers the period 2001 – 2011. The Economic Accounts for Agriculture and the Farm Structure Surveys are the main data sources. The comparison and evaluation devote to the key structural indicators, production, cost, subsidies, compensation of employees and income indicators in the Purchasing Power Standard (PPS). The cluster analysis identifies the specific structural and economic features within the EU. The paper also contains the international comparison based on the Factor Income per AWU and Wilcoxon signed-rank test. The results show the sharp drop in livestock production in the EU-12 after the EU accession. This was mainly caused by the reduction of the pig production. The unfavorable input-output value relations and the high number of labor input (AWU) per hectare generate relatively low income per AWU in the EU-12. The lower income level in the EU-12 corresponds to the lower compensations of employees in agriculture. The level of the current subsidies in the EU-27 becomes equal. Overall, there has been still the relatively large income disparity between the old- and the new EU member states. However, the gap slightly diminishes. The structure of agricultural holdings within the EU-27 is highly heterogeneous. This raises questions about the future CAP policy settings.

Keywords: economic indicators, agriculture, EU enlargement, income disparity