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Subsidies and agricultural productivity in the EU

Author

Listed:
  • Maria Garrone
  • Dorien Emmers
  • Hyejin Lee
  • Alessandro Olper
  • Johan Swinnen

Abstract

This paper investigates the relationship between EU agricultural subsidies and agricultural labor productivity growth by estimating a conditional convergence growth model. We use more representative subsidy indicators and a wider coverage (panel data from 213 EU regions over the period 2004–2014) than have been used before. We find that, on average, EU's Common Agricultural Policy (CAP) subsidies increase agricultural labor productivity growth, but this aggregate effect hides important heterogeneity of effects of different types of subsidies. The positive effect on productivity comes from decoupled subsidies, that is, Pillar I decoupled payments and some Pillar II payments. Coupled Pillar I subsidies have the opposite effect: they slow down productivity growth.

Suggested Citation

  • Maria Garrone & Dorien Emmers & Hyejin Lee & Alessandro Olper & Johan Swinnen, 2019. "Subsidies and agricultural productivity in the EU," Agricultural Economics, International Association of Agricultural Economists, vol. 50(6), pages 803-817, November.
    • Handle: RePEc:bla:agecon:v:50:y:2019:i:6:p:803-817
    DOI: 10.1111/agec.12526
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    Cited by:

    1. Nicola GALLUZZO, 2022. "Agritourism And Less Favored Areas Subsidies Impact On Technical Efficiency Of Italian Farms," Agricultural Economics and Rural Development, Institute of Agricultural Economics, vol. 19(1), pages 61-75.
    2. Mariarosaria Agostino & Ercan Enzo Comert & Federica Demaria & Sabrina Ruberto, 2024. "What kinds of subsidies affect technical efficiency? The case of Italian dairy farms," Agribusiness, John Wiley & Sons, Ltd., vol. 40(1), pages 116-138, January.
    3. Nicola Galluzzo, 2021. "Estimation of the impact of CAP subsidies as environmental variables on Romanian farms," Economia agro-alimentare, FrancoAngeli Editore, vol. 23(3), pages 1-24.
    4. Luca Romagnoli & Vincenzo Giaccio & Luigi Mastronardi & Maria Bonaventura Forleo, 2021. "Highlighting the Drivers of Italian Diversified Farms Efficiency: A Two-Stage DEA-Panel Tobit Analysis," Sustainability, MDPI, vol. 13(23), pages 1-16, November.
    5. Isabel Dinis, 2023. "Exploring the Drivers of Microregional Agricultural Labor Productivity: Empirical Insights from Portugal," Agriculture, MDPI, vol. 13(11), pages 1-19, November.
    6. You-hua Chen & Zhuang Zhang & Ashok K. Mishra, 2023. "A flexible and efficient hybrid agricultural subsidy design for promoting food security and safety," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-8, December.
    7. Oliynyk, Oleksandr & Makohon, Vitaliy & Mishchenko, Vitaliya & Brik, Svitlana, 2020. "Ефективність Витрат На Впровадження Нових Сортів І Гібридів У Рослинництві," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 6(4), December.
    8. Cecilia ALEXANDRI & Bianca PAUNA & Corina SAMAN, 2020. "The Relationship Between Total Factor Productivity and Subsidies in the Case of Romanian Farms," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 85-98, December.
    9. Wawrzyniec Czubak & Krzysztof Piotr Pawłowski, 2020. "Sustainable Economic Development of Farms in Central and Eastern European Countries Driven by Pro-investment Mechanisms of the Common Agricultural Policy," Agriculture, MDPI, vol. 10(4), pages 1-19, March.
    10. Yao Wei & Fanglei Zhong & Xijing Luo & Penglong Wang & Xiaoyu Song, 2021. "Ways to Improve the Productivity of Oasis Agriculture: Increasing the Scale of Household Production and Human Capital? A Case Study on Seed Maize Production in Northwest China," Agriculture, MDPI, vol. 11(12), pages 1-18, December.
    11. Nicola GALLUZZO, 2023. "An Analysis Of Crop Costs In Italian Nitrate Vulnerable Areas And Agri-Environmental Subsidies," Agricultural Economics and Rural Development, Institute of Agricultural Economics, vol. 20(1), pages 15-28.
    12. Kuhle Prudence Mnisi & Abdul Latif Alhassan, 2021. "Financial structure and cooperative efficiency: A pecking‐order evidence from sugarcane farmers in Eswatini," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 92(2), pages 261-281, June.
    13. Frýd, Lukáš & Sokol, Ondřej, 2021. "Relationships between technical efficiency and subsidies for Czech farms: A two-stage robust approach," Socio-Economic Planning Sciences, Elsevier, vol. 78(C).
    14. Yiyao Wang & Caizhi Sun & Wei Zou, 2021. "Study on the Interactive Relationship Between Marine Economic Growth and Marine Environmental Pressure in China," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 79(1), pages 117-133, May.
    15. Agnė Žičkienė & Rasa Melnikienė & Mangirdas Morkūnas & Artiom Volkov, 2022. "CAP Direct Payments and Economic Resilience of Agriculture: Impact Assessment," Sustainability, MDPI, vol. 14(17), pages 1-24, August.
    16. Galluzzo Nicola, 2020. "A Technical Efficiency Analysis of Financial Subsidies Allocated by the Cap in Romanian Farms Using Stochastic Frontier Analysis," European Countryside, Sciendo, vol. 12(4), pages 494-505, December.
    17. Pia Nilsson & Sofia Wixe, 2022. "Assessing long-term effects of CAP investment support on indicators of farm performance [Entrepreneurship: productive, unproductive, and destructive]," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 49(4), pages 760-795.
    18. Joanna Bereznicka & Ludwik Wicki, 2021. "Do Farm Subsidies Improve Labour Efficiency in Farms in EU Countries?," European Research Studies Journal, European Research Studies Journal, vol. 0(2B), pages 925-937.
    19. Kumbhakar, Subal C. & Li, Mingyang & Lien, Gudbrand, 2023. "Do subsidies matter in productivity and profitability changes?," Economic Modelling, Elsevier, vol. 123(C).
    20. Ivana Kravčáková Vozárová & Rastislav Kotulič & Roman Vavrek, 2020. "Assessing Impacts of CAP Subsidies on Financial Performance of Enterprises in Slovak Republic," Sustainability, MDPI, vol. 12(3), pages 1-18, January.
    21. Khafagy, Amr & Vigani, Mauro, 2022. "Technical change and the Common Agricultural Policy," Food Policy, Elsevier, vol. 109(C).
    22. Nathan P. Hendricks & Aaron Smith & Nelson B. Villoria & Matthieu Stigler, 2023. "The effects of agricultural policy on supply and productivity: Evidence from differential changes in distortions," Agricultural Economics, International Association of Agricultural Economists, vol. 54(1), pages 44-61, January.

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