Vitezslav Doubek, MEcon.1, Marta Sulcova-Seidlova, MEcon.1, and Jiri Strouhal, Ph.D.2. (1) Department of Trade and Finance, Czech University of Life Sciences, Kamycka 129, Prague 6, 165 21, Czech Republic, (2) Department of Financial Accounting and Auditing, University of Economics Prague, W. Churchill Square 4, Prague, 130 67, Czech Republic
Czech Republic faced some important political and economical changes due to the post communist development after 1989 which forces unavoidable accident for its agrarian sector. As the agricultural production has biological character, its structure may be clear just in long-term run. This production affects especially the item “CN-04 Milk and Dairy Production” although export of this item is highly unprofitable. From 2005 it is possible to apply International Financial Reporting Standards (IFRS) rules for reporting of these items in CR too, using standard IAS 41 – Biological Assets. However (and maybe fortunately because of current economic crisis) it is impossible to measure the biological assets such milk or dairy production at fair value what requires IAS 41 when using national accounting rules. Measuring these items at historical costs don’t affect expenses and therefore also profit (and taxes) of agrocompanies so much.
This paper deals with the effects of commodity “Milk and Dairy Production” on trade, finance and financial reporting in the Czech Republic. As, compared to European Union, the agriculture plays important role on national economy, it is a crucial question how to support the development of this sector using the E.U. grants. Unfortunately shall be stated that majority of Czech agricompanies are not able to receive money from these grants. Another possibility how to support this sector is to redeem duties at “open” market of E.U.