| Summary: | The paper analyses economic characteristics of the farms, situated in the less favored areas of Lithuania and Poland. A comparative analysis of farms located in less-favored areas in Lithuania and Poland was conducted in terms of their income diversification and economic situation. In addition, a short description of the compensation payments, their types and rates, was provided in both countries. Using the panel models and correlation analyzes, we identified the most important determinants of agricultural income. The gross agricultural income per hectare of UR was estimated as variable. It was hypothesized that the location of farms in LFA areas determined the income of their owners in a statistically significant way. The impact of compensatory payments on the economic situation of the surveyed companies in Lithuania and Poland was also shown.
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