Abstract:

Since 2004, subsidies, mainly from the European Union (EU) budget, have been one of the largest sources of income for rural development and agriculture in the Czech Republic. The main objectives of subsidies with visible microeconomic consequences include a wide range of thematic areas - e.g. production of quality and affordable food, support for competitive agriculture, public interest in landscape protection and rural development, etc. At the same time, the inflow of money in the form of subsidy limits the increase of unemployment in rural areas, and in turn promotes the development of the supply of services in small villages (Vučkovic, 2016). One of the leading policies in supporting the economy and the agro-food sector is the Common Agricultural Policy (CAP). The policy mainly focuses on ensuring a decent standard of living for farmers, promoting market measures and sustainable rural development in accordance with the requirements of each member state (Vardanyan, Balashova, & Khoruzhy, 2021). In the European Union, approximately 40% of land is farmed and the European Union's Common Agricultural Policy spends €55 billion annually (37% of the European Union's 2019 budget; 31% planned for 2027), which significantly affects land use decisions and biodiversity. The CAP has introduced various instruments to reduce the negative environmental impacts of agriculture. These include compulsory cross-compliance criteria (agri-environmental-climate and greening measures) for all farmers receiving subsidies.