The impact of fixed asset investments on the productivity of production factors in agriculture

Abstract

Purpose: The study aimed to determine the impact of the fixed asset investment on farms' productivity. The study adopted a research hypothesis according to which the increase of investment in fixed assets contributes to improved productivity of production factors in agriculture. Design/methodology/approach: The research was based on the Central Statistical Office data storage statistics and the study of reference books. The main source of information was the data from 4,803 farms, which consistently kept accounts within the Farm Accountancy Data Network system. The analyses were based on the productivity indicators in the researched farms. The Cobb-Douglas production function was used in the research. In addition to evaluating the effectiveness of the investment, there were used elements of marginal accounting. Findings: The Polish agricultural sector's investments after 2004 led to changes in the value and structure of agricultural holdings and supported the substitution of human labor with objectified labor. The studies have shown that an increase in the level of investment in agricultural holdings contributes to labor and land productivity growth. Moreover, the examined farms in the years 2005-2013 increased the productivity of capital equity, which indicates the development of farms. The increase in the investment outlays per unit of production factor contributed to increased investment efficiency. Practical Implications: The research results may be useful in economic practice in shaping investments in fixed assets in farms. They can also help to create an agricultural policy to support investment in agriculture. Originality/Value: The originality of the research consists of determining the impact of investments in fixed assets on the productivity of production factors in farms based on the Cobb-Douglas production function.