EFFICIENCY OF THE LITHUANIAN AGRICULTURAL SECTOR: RETURN ON FIXED ASSETS, OUTPUT, AND VALUE ADDED

This study is focussed on the Lithuanian agricultural sector which currently operates under both competition and support of the European Union and its Member States. The aim of the research is to identify the underlying factors causing changes in gross value added generated in agriculture. The enumerated methods were employed for the research: statistical analysis, ratio analysis, index decomposition analysis. The research covers period of 1995-2009. The efficiency of the Lithuanian agricultural sector as well as the whole economy was assessed by considering the two ratios, namely return on fixed assets (ROFA) and effectiveness ratio. The former one was computed by dividing total output from fixed assets, whereas the latter one was measured by dividing gross value added from total output. Agricultural fixed assets provided decreasing rates of return since 1996 until 2000. Afterwards ROFA in agricultural sector fluctuated around the value of 18 per cent and gained momentum in 2004 consequently reaching its peak in 2008 (22 per cent). Meanwhile, ROFA for the whole economy reached 41 per cent in 2008. The effectiveness in agricultural sector has been decreasing ever since 2003. As of 2009, effectiveness of agricultural sector was 35 per cent, whereas the same figure for the whole economy amounted to 52 per cent. Changes in fixed assets had similar impact on gross value added in agriculture and the whole economy, indexes of 1.9 and 2.2, respectively. ROFA and effectiveness, however, caused decrease of 36 and 12 per cent, in that order, in nominal gross value added. Meanwhile, these effects were positive for the whole economy. Given the results of our analysis, it can be concluded that fixed assets in Lithuanian agricultural sector could be used more efficiently.