Assessment of Economic Viability of Small-Scale Farms in Serbia

Abstract

Summary This paper deals with production and economic results of small-scale farms in the Republic of Serbia. Small-scale farms include farms with standard output value from 4,000 to 25,000 euros. The main aim of the paper is to determine and evaluate profitability and productivity of farms engaged in different types of farming. Economic viability of farms was determined based on profitability and productivity indicators. Although these indicators are not the only indicators of economic viability, they are most commonly used and the most reliable. The farms are divided into seven groups of farming: field crops, horticulture, vineyards and fruits, dairy production, livestock production – grazing livestock, granivores, mixed crops–livestock. The analysis was based on FADN data for a 5-year period (2015-2019). The number of farms in the sample was increasing over the years, reaching 1,655 in 2019, while a large number of them belonged to a class of small-scale farms (48.5%). Utilised agricultural area on average ranged from 9.2 ha to 10.8 ha per farm. The highest labour input was recorded in horticulture (2.5 – 4.0 AWU), while the lowest labour input was determined for field crops (1.5 – 2.0 AWU). The values of profitability and productivtity indicators were the highest for horticulture farms, which had the highest ROE indicator (0.257) and FNVA per AWU (11.4 thousands euros) in 2019. On the other hand, farms involved in grazing livestock had the lowest results, with ROE of 0.127 and FNVA per AWU of 6.4 thousands euros in 2019. As expected, more intensive types of farming (horticulture and granivores) achieved better results, so these farms are considered as more economically viable. Furthermore, less intensive types of farming (grazing livestock and mixed crops-livestock) should make better use of natural and internal resources, while farmers, especially younger ones, should withdraw from traditional and old-fashioned ways of production and be more innovative and creative in farm management.