Are Slovak farms financially healthier as a result of the Common Agricultural Policy of the European Union?

Abstract

Research background: The main goal of the Common Agricultural Policy (CAP) is to support farmers and improve their productivity. Agriculture is a specific sector of the economy, characterized by income support for farmers to ensure the availability of quality food. However, the question remains whether Slovak farms are financially healthy under the influence of the reformed CAP of European Union (EU)? Purpose of the article: The main goal of the article is to evaluate the financial health of Slovak farms using selected prediction techniques pointing to the impact of the CAP of EU. Methods: We have used data obtained from the financial statements of Slovak farms in the years 2009-2020. The financial health of farms will be assessed using selected generally constructed models of multivariate discriminatory analysis (Altman Z-score, IN 05, Creditworthiness Index, Taffler model), but also prediction models that have been specially constructed for the Slovak agricultural sector, such as G-index and CH-index. To detect the statistical differences between the years 2009-2013 and 2014-2020 in the value of prediction models of farms were used statistical t-tests of conformity in the surveyed sample. Findings & Value added: The results can be evaluated on two levels. The first of them is a look at the analysis of the financial health of Slovak farms in the context of the interpretation of the regulations of the Common Agricultural Policy of EU. The second output is an evaluation of the financial health of farms in the selected time period.