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The Relationship Between Total Factor Productivity and Subsidies in the Case of Romanian Farms

Author

Listed:
  • Cecilia ALEXANDRI

    (Institute of Agricultural Economics, Romanian Academy.)

  • Bianca PAUNA

    (Centre for Macroeconomic Modelling, NIER, Romanian Academy.)

  • Corina SAMAN

    (Institute for Economic Forecasting and Institute of Agricultural Economics, Romanian Academy.)

Abstract

The paper studies the determinants of total factor productivity of different size farms in Romania, and, in particular, the effect of the CAP subsidies on productivity. It uses the FADN public database and runs a multilevel mixed effects model. The most important conclusion is that subsidies are not conducing to productivity in the case of the Romanian farms. This conclusion is valid irrespective of the size and the type of the farm, with the exception of medium-sized dairy farms. Subsidies introduce an additional distortion to the large farms, which increase their land holding simply because the subsidies per acre are larger than the rent per acre.

Suggested Citation

  • 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.
    • Handle: RePEc:rjr:romjef:v::y:2020:i:4:p:85-98
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    References listed on IDEAS

    as
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    4. Cecilia ALEXANDRI & Corina SAMAN & Bianca PAUNA, 2021. "Exploring the Relationship Between Farm Productivity and CAP Subsidies for the NMS," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 124-140, December.
    5. Maria Garrone & Dorien Emmers & Alessandro Olper & Jo Swinnen, 2018. "Subsidies and Agricultural Productivity: CAP payments and labour productivity (convergence) in EU agriculture," Working Papers of LICOS - Centre for Institutions and Economic Performance 634340, KU Leuven, Faculty of Economics and Business (FEB), LICOS - Centre for Institutions and Economic Performance.
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    13. Zhu, Xueqin & Milán Demeter, Róbert, 2012. "Technical efficiency and productivity differentials of dairy farms in three EU countries: the role of CAP subsidies," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 13(1), pages 1-27.
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    Cited by:

    1. Cecilia ALEXANDRI & Corina SAMAN & Bianca PAUNA, 2021. "Exploring the Relationship Between Farm Productivity and CAP Subsidies for the NMS," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 124-140, December.
    2. Stoicea Paula & Tudor Valentina Constanța & Stoian Elena & Micu Marius Mihai & Soare Elena & Militaru Dan Ciprian, 2023. "Subsidies’ Impacts on Technical–Economic Indicators in Large Crop Farms," Agriculture, MDPI, vol. 13(9), pages 1-17, August.

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    More about this item

    Keywords

    CAP subsidies; investment; productivity; farm size; Romania;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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