GOVERNMENT-FUNDED AGRIBUSINESSES: EMPIRICAL EVIDENCE TO WHAT EXTENT IS FARMING SUPPORTED IN LITHUANIA

Abstract

The aim of this study was to evaluate the extent to which agribusinesses in Lithuania are supported by the government and to analyse the differences in the effectiveness of this support among farms. The study examines the degree to which current subsidies enhance revenue generated from core business operations and their impact on farm profitability, with a focus on differences related to farm size. To achieve these objectives, two indicators, including the nominal protection coefficient (NDSC) and return on assets (ROA), were used. The effect of current subsidies on RAO was measured as the difference between the values of indicator calculated “with subsidies” (reflecting the actual situation) and “without subsidies”. The findings indicate significant variation in the effectiveness of current subsidies across farms, suggesting a distortion of competitive conditions from an economic perspective.