Factors affecting the farm sustainability in Lithuania

Abstract

The results of multivariate regression between farm sustainability index and independent variables revealed that farm sustainability increases when: (i) the age of farmer is lower; (ii) the family annual work units/ha UAA and hired labour annual work units/ha UAA are reduced; (iii) the costs of chemical fertilizers and pesticides are reduced; (iv) the agro-environmental payments increase; (v) the income from sales of agricultural products increases; (vi) agricultural subsidies are reduced. The aim of the article is to perform factors affecting the farm sustainability in Lithuania. Objectives of the study are to frame an assessment methodology based on FADN data; to assess family farm relative sustainability and to reveal the relationship between calculated farm relative sustainability index and factors influencing it. Prepared family farm sustainability assessment methodology is relied on OECD (2008) handbook for constructing composite indicators. After detailed analysis of indicators in the farm sustainability assessment studies and the analysis of variables of FADN, the final set of 23 indicators that cover the three components (economic, environmental and social) of sustainability was identified. The min-max approach was employed to normalise the selected indicators expressed in variety dimensions for their need to be put on a common basis. The factor analysis was used to estimate weights for the selected indicators to construct sub-indices and then sub-indices were aggregated into farm relative sustainability index (FRSI). The FRSI and sub-indices ranged from 0 to 1 (scaled into three intervals), assuming that the closer to 1 were the values of the index and sub-indices the higher was relative sustainability of the farm. Data used to calculate indicators were collected from Lithuanian FADN. The analysis was based on survey sample composed of randomly selected 450 family farms in the year 2003, 2008 and 2012 and based on multivariate regression analysis, one-way ANOVA and t- test. The results of the research showed that economic sustainability was low, social sustainability medium and environmental high of family farms in 2003, 2008 and 2012.