SIGNIFICANCE OF INVESTMENT AND DIRECT SUPPORT MEASURES FOR FARMS’ INVESTMENTS: THE CASE OF LITHUANIA

The range of the impact of the public support to farmers is multifold because of huge variety of support measures which have different targets and different areas of impact. Thus there is a wide range of researched issues what leaves a lot of room for debate in the assessment of this public support's impact as the results from different research often contradict each other. This article contributes to this debate by focusing on two questions – 1) what is the significance of subsidies for investment and total current subsidies, excluding subsidies on investments, to gross farm investment on fixed assets; and 2) how this significance relates to the economic size of the farm and to the types of farming. The aim of this investigation is to examine the relationship between the gross farm investment and the subsidies under both investment and direct support measures, and to reveal their significance for gross investment in fixed assets in Lithuanian farms. Correlation and other statistical analysis methods were used. Research results show that after the economic crisis in 2009 the volume of GFCF in Lithuanian agriculture increased threefold, by annual 32% on average, and it was almost four times higher compared to national average. Besides, investment intensity ratio (the investment share of the GVA) in agriculture was significantly higher than in the whole economy. During the 2004-2013 growth of gross investment was most rapid in both small and large farms, as well as in mixed livestock and specialist milk farms. In particular, the gross investment quickly grew in very small farms. The significance of the subsidies on investment for gross investment was highest in the small farms and mixed crop farms. Meanwhile in the large farms and specialist farms (specialist milk, specialist horticulture and specialist cereals, oilseeds and protein crops), these subsidies were insignificant. The analysis suggested that a direct moderate correlation existed between the total current subsidies and gross investment in the small and medium farms and in specialist cereals, oilseeds and protein crops farms. A direct strong correlation between both variables existed in the specialist milk farms as well as in mixed crop and livestock farms. Statistical significance of correlations between the total current subsidies and gross investment was not found. JEL Codes: Q12, Q14, Q18. DOI: https://doi.org/10.15544/ssaf.2016.1