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An Empirical Assessment of the EU Agricultural Policy Based on Firm Level Data

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Author Info

  • Carmen Murillo

    ()
    (Universidad de Cantabria, Avda, Spain.)

  • Carlos San Juan Santander

    ()
    (Universidad Carlos III de Madrid)

  • Stefan Sperlich

    ()
    (Georg August Universitaet Goettingen)

Abstract

The study focuses on testing the hypothesis that the subsidy system of the Common Agricultural Reform in 1992 (CAP'92) drove to changes in farm efficiency towards the thereby claimed objectives. With sequential applications of semiparametric methods we succeed to identify the impact of the direct payments on environmental adaption, productivity and efficiency before and after CAP'92 without restrictive model specifications. We find that the claimed objectives of the EU subvention policy were met only partly, but that the CAP'92 was, however, a step forward. Our case study uses large Spanish data sets of animal orientated farms. This paper applies non parametric methods for policy evaluation at firm level. The study focuses on testing the hypothesis that the subsidy system of the Common Agricultural Reform in 1992 (CAP'92) drove to changes in farm efficiency towards the thereby claimed objectives. We concentrate here on animal oriented farms, in particular cattle, pig, sheep and goat farms. The correct quantification of efficiency and productivity differentials due to CAP'92 is crucial for such a policy analysis as different models can easily lead to different conclusions. Using non parametric methods we do not need to specify the production function of the farms. With sequential applications of semiparametric methods we succeed to identify the impact of the direct payments on environmental adaption, productivity and efficiency before and after CAP'92 without restictive model specifications. We find that the claimed objectives of the EU subvention policy were met only partly, but that the CAP'92 was - at least partly - indeed a step forward in that sense. Our case study uses large Spanish data sets of animal orientated farms. This is justified, among other reasons, by the relevance of these farms for Mediterranean forest and grazing land preservation in Spain.

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Bibliographic Info

Article provided by Justus-Liebig University Giessen, Department of Statistics and Economics in its journal Journal of Economics and Statistics.

Volume (Year): 227 (2007)
Issue (Month): 3 (June)
Pages: 273-294

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Handle: RePEc:jns:jbstat:v:227:y:2007:i:3:p:273-294

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Related research

Keywords: Common Agricultural Policy; subsidies; efficiency; non-parametric methods; natural resources; environmental economics;

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References

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  1. Mora, Ricardo & San Juan, Carlos, 2004. "Geographical specialisation in Spanish agriculture before and after integration in the European Union," Regional Science and Urban Economics, Elsevier, vol. 34(3), pages 309-320, May.
  2. Léopold Simar & Paul Wilson, 2000. "Statistical Inference in Nonparametric Frontier Models: The State of the Art," Journal of Productivity Analysis, Springer, vol. 13(1), pages 49-78, January.
  3. Carlos San Juan Mesonada & Stefan Sperlich & Carmen Murillo & Werner Kleinhans, 2005. "Efficiency, subsidies and environmental adaptation of animal farming under CAP," Others 0512015, EconWPA.
  4. Bullock, David S. & Salhofer, Klaus, 2003. "Judging agricultural policies: a survey," Agricultural Economics, Blackwell, vol. 28(3), pages 225-243, May.
  5. Antonio Alvarez & Carlos Arias, 2003. "Diseconomies of Size with Fixed Managerial Ability," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 134-142.
  6. V. Ball & Jean-Christophe Bureau & Jean-Pierre Butault & Richard Nehring, 2001. "Levels of Farm Sector Productivity: An International Comparison," Journal of Productivity Analysis, Springer, vol. 15(1), pages 5-29, January.
  7. Ball, V. Eldon & Lovell, C.A. Knox & Luu, H. & Nehring, Richard F., 2004. "Incorporating Environmental Impacts in the Measurement of Agricultural Productivity Growth," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(03), December.
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Cited by:
  1. Moro, Daniele & Sckokai, Paolo, 2013. "The impact of decoupled payments on farm choices: Conceptual and methodological challenges," Food Policy, Elsevier, vol. 41(C), pages 28-38.

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