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Impact of CAP Subsidies on Technical Efficiency of Crop Farms in Germany, the Netherlands and Sweden

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  • Xueqin Zhu
  • Alfons Oude Lansink
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    Abstract

    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. Copyright (c) 2010 The Authors. Journal compilation (c) 2010 The Agricultural Economics Society.

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    Bibliographic Info

    Article provided by Wiley Blackwell in its journal Journal of Agricultural Economics.

    Volume (Year): 61 (2010)
    Issue (Month): 3 ()
    Pages: 545-564

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    Handle: RePEc:bla:jageco:v:61:y:2010:i:3:p:545-564

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    Cited by:
    1. Rizov, Marian & Pokrivcak, Jan & Ciaian, Pavel, 2013. "CAP Subsidies and the Productivity of EU Farms," Factor Markets Working Papers 148, Centre for European Policy Studies.
    2. Bachev, Hrabrin, 2011. "Effects of EU CAP implementation on Bulgarian farms," MPRA Paper 35510, University Library of Munich, Germany.
    3. Skevas, Theodoros & Lansink, Alfons Oude & Stefanou, Spiro E., 2012. "Measuring technical efficiency in the presence of pesticide spillovers and production uncertainty: The case of Dutch arable farms," European Journal of Operational Research, Elsevier, vol. 223(2), pages 550-559.
    4. Bakucs, Lajos Zoltan & Ferto, Imre & Latruffe, Laure & Desjeux, Yann & Soboh, Rafat & Dolman, Mark, 2011. "Comparative Analysis of Technical Efficiency in European Agriculture," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114235, European Association of Agricultural Economists.
    5. Marian Rizov & Jan Pokrivcak & Pavel Ciaian, 2013. "CAP Subsidies and Productivity of the EU Farms," Journal of Agricultural Economics, Wiley Blackwell, vol. 64(3), pages 537-557, 09.
    6. Latruffe, Laure & Bravo-Ureta, Boris E. & Moreira, Victor H. & Desjeux, Yann & Dupraz, Pierre, 2011. "Productivity and Subsidies in European Union Countries: An Analysis for Dairy Farms Using Input Distance Frontiers," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114396, European Association of Agricultural Economists.
    7. Latruffe, Laure & Bravo-Ureta, Boris E. & Moreira, Victor H. & Desjeux, Yann & Dupraz, Pierre, 2012. "Productivity and Subsidies in the European Union: An Analysis for Dairy Farms Using Input Distance Frontiers," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126846, International Association of Agricultural Economists.
    8. Bakucs, Lajos Zoltan & Ferto, Imre & Fogarasi, Jozsef & Latruffe, Laure & Desjeux, Yann & Matveev, Eduard & Marongiu, Sonia & Dolman, Mark & Soboh, Rafat, 2011. "EU farms’ technical efficiency and productivity change in 1990 – 2006," 85th Annual Conference, April 18-20, 2011, Warwick University, Coventry, UK 108773, Agricultural Economics Society.

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