Economic component of ANC payments. Example of the farms in Poland

Conducting agricultural activity in areas facing natural constraints (ANC) affects farms' production and economic results.ANC payments were introduced to compensate farmers for higher costs and lost income.The aim of the study is to compare the production and economic results of farms receiving ANC support with other farms.It was hypothesized that ANC farms achieve lower production and economic results than other units.The analysis is based on Polish FADN data concerning 2015.The sample included 12,105 farms, of which 4,652 (38.43%) received ANC subsidies.To describe the characteristics of the surveyed farms, positional measures were used due to strong asymmetry.The Mann-Whitney U test was used to assess the significance of differences in distributions.The results indicate the existence of significant differences in the production potential, production and economic efficiency of farms receiving ANC payments and ones without them.Agricultural farms receiving ANC payments are characterized by a significantly smaller area of agricultural land, a lower share of arable land in the UAA and a smaller share of leased land.They also have lower production volume, lower land and labour productivity.They achieve relatively lower incomes.Nevertheless, the payments to a small extent reduce these differences.On this basis, it can be concluded that ANC payments in Poland do not provide full compensation for differences in the production and economic results of a farm with worse agri-environmental conditions.Therefore, the impact of the CAP on the economic results of farms located in ANC is relatively small.