Journal
JOURNAL OF AGRICULTURAL ECONOMICS
Volume 61, Issue 3, Pages 545-564Publisher
WILEY
DOI: 10.1111/j.1477-9552.2010.00254.x
Keywords
Crop farming; frontier models; technical efficiency; the CAP reform; D21; Q12; Q18
Categories
Funding
- European Commission [022653]
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This paper analyses the impacts of CAP reforms, particularly subsidies on technical efficiency of crop farms. An output distance function is employed and estimated together with an inefficiency effects model to capture the effects of CAP subsidies and farmer characteristics on farm efficiency. The model is applied to FADN data (period 1995-2004) of crop farms in Germany, the Netherlands and Sweden. The study shows that the 10-year average technical efficiency is 64% in Germany, 76% in the Netherlands and 71% in Sweden. The average annual changes in technical efficiency are 0.1%, 0.4% and 2.3%, respectively. The share of crop subsidies in total subsidies has a negative impact on technical efficiency in Germany but a positive impact in Sweden, although insignificant in the Netherlands. The share of total subsidies in total farm revenues has negative impacts on technical efficiency in all three countries, consistent with income and insurance effects. Positive (negative) change in technical efficiency is mainly attributable to farm size (degree of specialisation) in Germany, and degree of specialisation (degree of subsidy dependence) in the Netherlands and Sweden.
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