The aim of this paper is to determine the influence of the Common Agricultural Policy’s (CAP) subsidies on the level of economic sustainability of farms by means of three-fold study. To determine the economic sustainability of farms the authors applied the income gap ratio. Next, the level of income differentiation between farms of various economic classes was established. The last part consisted of the recognition of statistically significant CAP schemes that shape agricultural income in farms of different size and in assessing how the respective subsidies should increase or decrease to fill the recognized gap, based on the coefficients of panel regression. The spatial scope covered all EU countries in 2005–2015. Results show that due to the CAP’s support the average income of farms has approached the average non-agricultural income, but distribution of this support favored the largest farms, increasing disparities within the sector.

The conflict between capital-intensive agriculture, often called industrial agriculture, and sustainable farming is ongoing, and not because of Western European countries, where intensification is increasingly sustainable. It is caused by several million small farms in Central and Eastern Europe that must choose a long-term development path. This is also a dilemma for agricultural policy: Are small farms so environmentally friendly that they should play the role of ‘landscape guardians’ at the expense of public support and economic vegetation, or should they strive to improve productivity through investments? This study offers a methodological contribution to the value-based sustainability approach by computing indicators of environmental sustainable value (ESV). The authors have attempted to combine the value-oriented approach with frontier benchmarking. They then tested how the European Union Common Agricultural Policy (CAP) schemes contribute to ESV using a long-term panel of regionally representative farms from Farm Accountancy Data Network (FADN) with regard to factor endowments, for the years 2004–2017. The seminal within–between specification was employed to control the time variant and time invariant space heterogeneity of European regions. The main finding is that higher investment support is beneficial to ESV. Regarding factor endowment influence, there was a positive impact of the capital–labour ratio. Except the cross-sectional impact of environmental subsidies, the payments exert a negative effect on ESV.

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Facing enormous differences in factor endowments across European agriculture the aim of the study was to identify the significance of differences in land, capital and labour endowments on the efficiency of different agricultural production types in the EU. The Ward Cluster Analysis was used to distinguish groups of EU regions, significantly differing in factor endowment, DEA model to determine the relative differences in technical efficiency of different types of agricultural production in EU regions and ANOVA analysis to assess the significance of differences in the efficiency of agricultural production types between these EU regions. It was found that generally the agriculture of the EU-12 regions was characterised in 2015 by higher efficiency of transforming inputs into effects than households in the EU-15 regions. Therefore, factor endowments play a significant role in transformation of production factors into effects. The article shows that there is a diversity of factor endowments in agriculture between EU region groups, which translates into differences in the technical efficiency of agricultural holdings of various types of production.

Sustainable development plays an important role in shaping conditions for economic growth, social development and care for the natural environment. The issue was also noticed at the level of the European Union, which is expressed among others by creating sectoral policies, including the Common Agricultural Policy. The aim of the article is to determine the influence of the Common Agricultural Policy on the level of socio-economic sustainability of farms in Poland. The authors formulate a hypothesis that the existing solutions serve the achievement of economic sustainability, determined by the agricultural to non-agricultural income ratio, but they do not provide sustainability of farms in terms of the social element understood as taking income disparities into consideration. In the article, panel regression and the ratio of income from representative FADN farms to average annual gross salary per employee in Poland in the years 2004–2017 were used. It was found that thanks to the support from the Common Agricultural Policy, the average income of farms comes close to the average income of the non-agricultural sector. However, the influence of the subsidies on changes in economic sustainability was uneven in various economic size classes of farms—the strongest farms benefited the most, which means that social sustainability in terms of equal distribution of income was not achieved.

Changes in the retail prices of pasteurised milk, purchase prices, and the price relationship between retail prices for pasteurised milk and other food products are analysed for Poland during the period from 2004–2018. In addition, the paper presents factors affecting changes in milk prices in Poland and characterises the Common Agricultural Policy (CAP) on the milk market. The adoption of a long period of analysis allows for the study of periods of both high and low variability. The data analysis uses various methods including the Augmented Dickey-Fuller (ADF) test and the Autoregressive-Moving-Average Model (ARMA). The milk market showed significant response because it was one of the few that was strongly administered by the European Union. These policies led to a significant increase in milk prices in the analysed period. The average price of pasteurised food milk increased by 63% in 2003–2015, and the purchase farm price of milk increased by 91.74%. The situation changed when the production limits were eliminated after 2015. In the initial period after quotas ended, the price of milk decreased and then increased. Similar changes were observed in other EU countries. Even short-term fluctuations associated with economic crises did not significantly affect the milk market.

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Although sustainable development is a topic broadly discussed in the literature in relation to existing policy stimulus, a holistic approach to the implementation of sustainability in agriculture—for which there are three dimensions (economic, social and environmental)—is still missing. A regional approach, which averages the entire EU region, could therefore be useful in the long term for recommending directional guidelines for the Common Agricultural Policy (CAP). The objective of this study is to investigate the impact of key groups of CAP instruments and factor intensity on the three above-mentioned aspects of sustainability in the 2004–2017 period, with the assumption that they are all reciprocally related. This goal was achieved by measuring sustainability using the modified sustainable value approach combined with frontier-based nonparametric assessment and applying structural equation modelling, including multilevel random intercept. This research highlights trade-offs between environmental, economic and social efficiency and checks the impact of the EU CAP schemes on the sustainability of environmental, economic, and social dimensions in agriculture. Despite common indications of trade-offs, particularly between economic performance and eco-efficiency, our study shows that in the long term, such feedback has not occurred in any EU regions. Moreover, there are positive interactions between all three dimensions of sustainability from a cross-sectional perspective. The analysis of the impact of CAP subsidies proves that the current system of agri-environmental, set-aside and rural development payments has been effective in the long term, although broader implementation of environmental schemes in regions with lower labour productivity may negatively affect social sustainability.