Problems and Risks Linked with Investment Supports in Agrarian Sector - The Czech Experience

The CAP and National Priorities within the EU Budget after 2020, Ed. M. Wigier, A. Kowalski, series "Monographs of Multi-Annual Programme" no 75.1, IAFE-NRI, Warsaw 2018; ISBN 978-83-7658-751-6

18 Pages Posted: 22 Jan 2019

See all articles by Marie Pechrova

Marie Pechrova

Institute of Agricultural Economics and Information

Tomas Doucha

Institute of Agricultural Economics and Information

Ondrej Chaloupka

Institute of Agricultural Economics and Information

Date Written: 2018

Abstract

The grant system under the RDP has been long prevailing for investment supports in the Czech agriculture. The current evaluation system of investment projects is based on financial plans that use normative data to simplify the administration. This limits applicants for supports, especially when their holdings have better performance than the normative approach. To the contrary, when the farms have worse performance, they obtain supports even if it is not real to repay back sources, before the end of lifetime of the investment. In the case of supports in food processing investments, the heterogeneity of products is high and, therefore, the farmers prepare the whole simplified financial plan by themselves, applying their own data. The only control is by the comparison with the average profitability of the food products. The normative values are usually low, and many projects would not pass. Therefore, the applicants can justify their real profitability. However, it requires additional assessment and complicates the evaluation procedures. Considering the above-mentioned and other problems with the grant system, it is desirable in the next programming period and for the so-called productive investments to apply other forms of supports, based mainly on financial instruments.

Keywords: investment supports, evaluation, Rural Development Programme

JEL Classification: H43, O22, B41

Suggested Citation

Pechrova, Marie and Doucha, Tomas and Chaloupka, Ondrej, Problems and Risks Linked with Investment Supports in Agrarian Sector - The Czech Experience (2018). The CAP and National Priorities within the EU Budget after 2020, Ed. M. Wigier, A. Kowalski, series "Monographs of Multi-Annual Programme" no 75.1, IAFE-NRI, Warsaw 2018; ISBN 978-83-7658-751-6 , Available at SSRN: https://ssrn.com/abstract=3309627

Marie Pechrova (Contact Author)

Institute of Agricultural Economics and Information ( email )

Mánesova 1453/75
120 00 Praha 2
Czech Republic

Tomas Doucha

Institute of Agricultural Economics and Information ( email )

Mánesova 1453/75
120 00 Praha 2
Czech Republic

Ondrej Chaloupka

Institute of Agricultural Economics and Information ( email )

Mánesova 1453/75
120 00 Praha 2
Czech Republic

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