Significance of less favoured area measures for income generation of family farm in Lithuania

Abstract

The paper provides the review of recent studies on the impact of LFA policy on viability of rural community and empirical study of significance of less favoured area measures for income generation of family farm in Lithuania. The review of previous studies has shown that LFA policy has different effects on farm income. For some LFA policy provides compensatory allowances to decrease the income gap between members of rural community, for others LFA policy impact in reduction of income inequality is limited. The spatial and temporal analysis of income and direct aid payments using Lithuanian FADN data and income decomposition technique shows that before entering the EU and in the first years of the EU membership, Lithuanian family farm income in less favoured areas were much lower than in non less favoured areas and, vice versa, they were higher during the residual research period.