Analysis of Agriculture Subsidy Policy Tools - Aplication of Production Function

The submitted paper is focused on the evaluation of the Common Agriculture Policy impact on economic results of Czech organic farmers. The aim of the paper is a complex evaluation of the influence of subsidy on production, costs, profit and technical efficiency of organic farms. The partial aim is to evaluate different methods of subsidy rate calculation. The main methodological tool for achieving mentioned aims is an analysis using a production and a stochastic frontier production function. This approach has not been used in the Czech Republic yet. The previous studies, analyzed subsidy of organic farming, were based on a comparison of especially family farm income, profit or costs of organic and conventional farming. The analysis was conducted on the basis of unbalanced panel data from 143 organic and 388 conventional enterprises - legal entities, obtained over the time period 2004 - 2008. The sample of organic farms represents 58 % of the entire population of organic legal entities. Results of the analysis indicate negative impact of subsidies on production, profit and technical efficiency of organic farmers and refer to the reality that actual level of subsidy discourages organic farmers from rational behavior and implicates their dependence on state support.