Key Drivers of European Agriculture: Output, Income, and Stocks in Focus

Purpose: The article attempts to analyze stock in relation with output and incomes in agricultural farms in the European Union. We answer the following questions: 1. How important are stocks in farms in relation with balance sum, agricultural area, output and income?; 2. Does the importance of stock depends on the economic size or type of production?; 3. What is the relation between stock output, income and other categories? Methodology: Research is based on the FADN (RICA) database. The scope of the research covers the years 2004-2021. The panel data models are used. Findings: The larger the farm in terms of economic size, the more agricultural area it has, the higher balance sum it manages, and the higher the production and income it generates. Stock of agricultural products increases also with these categories. Taking into account the level of stock, the geographical location of farm is important too but not a type of production. After conducting panel regression, it turns out that the level of stock in farm is influenced by: labour, utilised agricultural area, output, and to a lesser extent: income, liabilities and cash flow. Practical Implications: Farms play an important role as part of agricultural systems in the process of sustainable development. EU policy is focused on agriculture, especially on family farms. When farms generate income, they are able to perform their production functions continuously and efficiently. They become resilient to disruptions and unexpected crises occurring in the economic environment. The appropriate amount of stock helps maintain the continuity of production, it is a part of current assets dedicated for use in case of necessity. Originality/Value: Nowadays issues related to stock management in the context of production and income of the agricultural farms are of interest only to farmers. They are not the subject of discussion among scientists, journalists, politicians, social activists, employees of agricultural advisory centers or banks. Only the methodology for elaborating the life cycle inventory of agricultural products is discussed. Lack of the economic research in this area is a big research gap in the science.