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Technical Efficiency of the Crop Farms under the Various CAP Reforms: Empirical Studies for Germany, the Netherlands and Sweden

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  • Zhu, Xueqin
  • Oude Lansink, Alfons G.J.M.
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    Abstract

    We analyse the impacts of the CAP reforms on the technical efficiency of the crop farms. We use an output distance function and an inefficiency effects model which incorporates the influences of exogenous variables on farm efficiency. We formulate policy variables (e.g. the CAP subsidies) and producer characteristics as explanatory variables in the inefficiency effects model. We use the 1995- 2004 FADN data to estimate the production frontiers of the crop farms in Germany, Netherlands and Sweden, to derive their technical efficiency, and to determine the effects of the explanatory variables. The study shows that the 10-year average technical efficiency of crop farms is 59% in Germany, 75% in Netherlands, and 70% in Sweden. The average annual technical efficiency change is 0.1%, 0.7% and 2.7% respectively for Germany, Netherlands and Sweden.

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    Bibliographic Info

    Paper provided by European Association of Agricultural Economists in its series 107th Seminar, January 30-February 1, 2008, Sevilla, Spain with number 6589.

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    Date of creation: 2008
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    Handle: RePEc:ags:eaa107:6589

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    Keywords: technical efficiency; the CAP reform; frontier models; crop farming; Agricultural and Food Policy; Farm Management; Research and Development/Tech Change/Emerging Technologies;

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    1. Mary Clare Ahearn & Jet Yee & Penni Korb, 2005. "Effects of Differing Farm Policies on Farm Structure and Dynamics," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(5), pages 1182-1189.
    2. R. Glenn Hubbard & Anil Kashyap, 1990. "Internal Net Worth and the Investment Process: An Application to U.S. Agriculture," NBER Working Papers 3339, National Bureau of Economic Research, Inc.
    3. Teresa Serra & Barry K. Goodwin & Allen M. Featherstone, 2005. "Agricultural Policy Reform and Off-farm Labour Decisions," Journal of Agricultural Economics, Wiley Blackwell, vol. 56(2), pages 271-285.
    4. Coelli, Tim & Perelman, Sergio, 1999. "A comparison of parametric and non-parametric distance functions: With application to European railways," European Journal of Operational Research, Elsevier, vol. 117(2), pages 326-339, September.
    5. Greene, William H., 1980. "On the estimation of a flexible frontier production model," Journal of Econometrics, Elsevier, vol. 13(1), pages 101-115, May.
    6. Ahmad, Munir & Boris E., Bravo-Ureta, 1996. "Technical efficiency measures for dairy farms using panel data: a comparison of alternative model specifications," MPRA Paper 37703, University Library of Munich, Germany.
    7. Laure Latruffe & Kelvin Balcombe & Sophia Davidova & Katarzyna Zawalinska, 2004. "Determinants of technical efficiency of crop and livestock farms in Poland," Applied Economics, Taylor & Francis Journals, vol. 36(12), pages 1255-1263.
    8. Bernhard Br�mmer & Thomas Glauben & Geert Thijssen, 2002. "Decomposition of Productivity Growth Using Distance Functions: The Case of Dairy Farms in Three European Countries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 628-644.
    9. Barry K. Goodwin & Ashok K. Mishra, 2006. "Are “Decoupled” Farm Program Payments Really Decoupled? An Empirical Evaluation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(1), pages 73-89.
    10. Hennessy, David A., 1998. "The Production Effects of Agricultural Income Support Policies Under Uncertainty," Staff General Research Papers 1207, Iowa State University, Department of Economics.
    11. David Hadley, 2006. "Patterns in Technical Efficiency and Technical Change at the Farm-level in England and Wales, 1982-2002," Journal of Agricultural Economics, Wiley Blackwell, vol. 57(1), pages 81-100, 03.
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