The assessment of the effects of investment support measures of the Rural Development Programmes: the case of the Czech Republic

The investment support has been considered as a principal vehicle for enhancing competitiveness of the Czech agriculture since the early days of the economic transition. However so far, little attention has been paid to the evaluation of actual effects of the corresponding support programmes. The objective of this paper is to assess economic and other effects of the measure 121 “Modernisation of Agricultural Holdings” of the RDP 2007-2013 on the Czech farms. The counterfactual approach is adopted investigating what would have happened if the supported producers did not participate in the programme and then comparing the result indicators. The quantitative analysis of programme effects is complemented by a qualitative survey on 20 farms which received the investment support between 2008 and 2010. The quantitative assessment showed significant benefits of the investment support in terms of business expansion (GVA) and productivity (GVA/labour costs) improvements. These results were confirmed by the qualitative survey. It showed that production expansion and productivity increase were primary objectives of the investment strategies on most of the farms. The public support enabled farms to achieve these strategic objectives. The respondents of the survey declared that the supported investment was important for their prosperity however, we could not prove it in the quantitative assessment in terms of profit and cost/revenue ratio. Finally, the issue of deadweight of the investment support is discussed: the figures on very low net investment relatively to the provided public support at the sector level and answers of respondents indicate possible significant deadweight, however, the insight is incomplete, since it does not take into account post accession restructuring of the sector and multiannual and multi-enterprise character of investment at the farm level