**4. Discussion and Conclusions**

The aim of the study was to identify and assess the factors influencing the increase of the financial energy of a farm through the use of external capital, taking into account the farmer's and farm characteristics. For its implementation, a logistic regression model and a classification and regression tree analysis (CRT) were used. The study was conducted on a group of farms in Central Pomerania (Poland) participating in the system of collecting and using data from farms (FADN). Data on 348 farms were used for the analyzes, obtained through a survey conducted in 2020 with the use of a questionnaire.

Based on the analysis of the research results presented in the literature to date, it was established that the use of external capital as a source of financial energy in a farm is determined, on the one hand, by the socio-demographic characteristics of the farmer (**AGE**, **GEND**, **EDU**, **EDU\_EC**, **SUC**) and the characteristics of the farm (**PROD\_VALUE**, **AREA**, **SPEC**), and, on the other hand, by the availability of external financing sources. Factors relating to the first of these aspects were taken into account in the study.

Using the logistic regression model, it was established that the propensity to incur debt of farms is promoted by the following factors: gender of the head of the household (male, **GEND**), younger age of the head of the household (**AGE**), having a successor by the head of the household, who will take over the household in the future (**SUC**), higher value of generated production (**PROD\_VALUE**), larger farm area (AREA) and multi-directional production of a farm (production diversification), as opposed to targeting plant or animal production (**SPEC**). The results of the analysis carried out with the use of classification and regression trees (CRT) showed that the key factors influencing the use of external capital in the agricultural production process are, first of all, features relating to an agricultural holding: the value of generated production (**PROD\_VALUE**), agricultural area (**AREA**) and production direction (**SPEC**). The age of the farm manager (**AGE**) turned out to be of

key importance among the farmer's features favoring the tendency to incur debt in order to finance agricultural activity.

Among the surveyed entities of Central Pomerania, the chance of using outside capital is 115.2% higher in farms managed by men than in farms managed by women (*ceteris paribus*). The direction of this relationship is consistent with the research results presented in the literature [63,64]. It was also established that in the case of farms with a designated successor, the chance of financing agricultural activities with external capital is 76.4% higher in relation to farms where no successor has been designated (*ceteris paribus*). Moreover, the study proved that the farmer's age has an influence on the propensity of farms to borrow, and this tendency is higher in the case of younger farmers, which is consistent with the results of the research by Amjad and Hasnu [53]. It was also determined that the propensity to use external capital is also determined by the features relating to the farm. The results of the study show that increasing the farm area by one hectare will increase the probability of using external capital by the farm by 1.2% (*ceteris paribus*). This is consistent with the results of the studies by Kata [55], Subash and Ali [64] and Thorat et al. [57]. Moreover, in the case of farms whose annual production value exceeds PLN 100,000, the chance of financing agricultural production with external capital is 239.2% higher than in farms characterized by a lower annual production value (*ceteris paribus*). The direction of the impact of the variables included in the analysis is as predicted, except for the production specialization (**SPEC**). This means that in the case of the researched farms in Central Pomerania, multidirectional farms, diversifying production, are more likely to use outside capital in financing agricultural activities than those focused on one type of animal or plant production. This is probably due to the development processes of farms in the analyzed area. The data of the General Agricultural Census 2020 show that dynamic changes are taking place in agriculture in Poland, which are manifested by an increasingly stronger specialization of farms, with a simultaneous progressive concentration of agricultural production [97]. The studied farms with a multidirectional production profile use outside capital to a greater extent to finance their activities than units focused plant or animal production, because they are probably in the transformation phase, therefore show greater investment activity, and, to finance their investments, they also involve—apart from equity external sources of financing thus increasing their financial energy. The verification of this hypothesis will constitute the next stage of research.

The results obtained in the course of the research contribute to both literature and practice. With regard to the first aspect, the presented results constitute a thread in the discussion of factors influencing the decisions of farms in the use of external capital in the agricultural production process. They also confirm the thesis about the high degree of self-financing of farms and their relatively low tendency to borrow (see e.g., [6,95]). Moreover, based on Korol [2,4], the paper proposes a conceptual approach to "*financial energy of a farm*", understood as the general financial situation of the farm. It mainly consists of possessing capital that allows for agricultural activity, which is both the cause and the consequence of the determinants of financial and investment decisions of a given entity. With regard to practice—the results of our research may constitute an important source of information, e.g., for financial institutions that deal with preparing offers in the field of external sources of financing for agricultural activities.

The obtained results have become a contribution to determining the direction of further research, which will include, among others, establishing the hierarchy of financing sources for farms and identifying factors that determine it. Assessing farmers' willingness to use leasing as an alternative to credit as a source of investment financing was also planned, as well as identifying factors determining its use. In the next stage of the research, it was also planned to report on the applicability domain of the developed models according to Roy, Kar and Ambure [98] and de Assis et al. [99]. The models will also be built using *r*<sup>2</sup> *m* metrics for validation according to Roy et al. [100] and Gajo et al. [101].

For further research, establishing the importance of using external capital in the process of transformation and specialization of agricultural production is also being planned.

This issue is of particular importance in the context of the implementation of target 2.3 of sustainable development [7], which concerns the doubling of agricultural productivity and income of small-scale food producers—thus increasing the financial energy of the agricultural holding, which can be achieved, among others, through the specialization of agricultural production. Also in this context, the financial energy of a farm becomes of great importance, as it can be activated or increased by recapitalization in the form of external capital. This form of energy triggers subsequent processes—both on the micro scale (a farm) and in the resulting macroeconomic processes, including the context of the implementation of global sustainable development goals (SDGs). Agriculture is a sector around which many of the defined SDGs concentrate. This is because farmers manage the vast majority of natural resources. Therefore, activities aimed at eliminating hunger or poverty, as well as those related to environmental protection and adaptation to climate change, are concentrated around them. Thanks to the use of external capital in the farm itself, processes in the form of investment and financial decisions are launched, which improve the financial situation—an increase in the financial energy of the farm, thus improving the financial condition of the farmer's household (increase in the financial energy of households) [2,4]. Moreover, financial energy is transferred from farms to many entities, changing its form. The importance of farms in the food supply chain should be emphasized here.

**Author Contributions:** Conceptualization, D.Z., A.S. and E.S.-S.; methodology, D.Z., A.S. and E.S.-S.; software, D.Z. and A.S.; validation, D.Z., A.S. and E.S.-S.; formal analysis, D.Z. and A.S.; investigation, D.Z., A.S. and E.S.-S.; resources, D.Z. and A.S.; data curation, D.Z. and A.S.; writing—original draft preparation, D.Z., A.S. and E.S.-S.; writing—review and editing, D.Z., A.S. and E.S.-S.; visualization, D.Z., A.S. and E.S.-S.; supervision, D.Z., A.S. and E.S.-S.; project administration, D.Z., A.S. and E.S.-S.; funding acquisition, D.Z. and A.S. All authors have read and agreed to the published version of the manuscript.

**Funding:** The study was carried out as part of the research project entitled: Smart development of Central Pomerania—an innovative approach to creating the competitive advantage of the region, financed by the Minister of Science and Higher Education in Poland under the "Dialog" program (contract number: 0131/DLG/2019/10), action: Financial exclusion of agricultural households and its importance for the development of financial services in the region of Central Pomerania in the context of creating an offer of innovative financial services that support the creation and development of smart specializations.

**Institutional Review Board Statement:** Not applicable.

**Informed Consent Statement:** Not applicable.

**Conflicts of Interest:** The authors declare no conflict of interest. The funders had no role in the design of the study; in the collection, analyses, or interpretation of data; in the writing of the manuscript, or in the decision to publish the results.

## **References**

