Subsidies for operational activities and the financial stability of farms in European Union countries

The aim of the article was to identify the economic situation of farms operating in the European Union countries, taking into account subsidies for operational activity, and to indicate the factors that influenced the financial surplus. The ability to generate a financial surplus was considered a manifestation of achieving financial stability of the farm. The source of data was the FADN database, and the research period covered the years 2009–2015. The quartile method was used to group countries, and the variable that determined the classification into the appropriate quartile was the economic size of the farms. Panel models with fixed effects were used to build econometric models. The conducted research shows that farms operating in the EU were diversified in terms of their endowment with production factors, especially land and capital, which was reflected in the achieved economic and financial results. Direct subsidies were a significant element influencing the income achieved in all years and in almost all countries. Without subsidies, farmers in almost half of the EU countries would not be able to achieve income from agricultural activity. The models constructed indicated that the amount of financial surplus is influenced by various factors, depending on the economic size of the farm. Regardless of the quartile, however, the destimulant of the financial surplus was direct payments.