Key Determinants of the Economic Viability of Family Farms: Evidence from Serbia

Ensuring a fair income for farmers, as one of the key objectives of the Common Agricultural Policy (CAP), focuses on the economic dimension of sustainable agricultural development. Achieving the economic viability of farms is often prioritized in developing countries, as the economic dimension is crucial for farm survival in the long term. This paper aims to assess the economic viability of farms and examine the impact of various factors on their viability. The study focuses on family farms that were part of the Serbian Farm Accountancy Data Network (FADN) sample over a seven-year period from 2015 to 2021. Farm economic viability is evaluated using the opportunity cost approach. The results show that the highest proportion of economically viable farms was found in field crop farming, while grazing livestock farms were the least economically viable due to the extensive farming methods they typically employ. Among the determinants of farm viability, the most important was the asset turnover ratio, which positively influenced the economic viability of all types of farming. The results obtained may help farm managers identify the primary obstacles to achieving optimal long-term performance. Moreover, agricultural policymakers could improve existing measures and introduce new ones to strengthen the overall economic viability of farms.