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Analyzing the impact of direct subsidies on the performance of the Greek Olive Farms with a non-monotonic efficiency effects model

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  • Zhu, Xueqin
  • Karagiannis, Giannis
  • Oude Lansink, Alfons G.J.M.

Abstract

We analyse the impacts of the CAP reforms on technical efficiency of Greek olive farms. We use a production frontier function and a non-monotonic inefficiency effects model which incorporates the influences of exogenous variables on the mean and the variances of farm efficiency. We formulate policy variables (e.g. the direct subsidies) and farm characteristics as explanatory variables in the inefficiency effects model. We use the 1995-2004 FADN data to estimate the production frontier, to derive technical efficiency, and to determine the effects of the explanatory variables. The study shows that the 10-year average technical efficiency of olive farms is 69%. Direct transfers have a negative and monotonic effect on technical efficiency, while the degree of specialization has a non-monotonic effect on technical efficiency.

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Bibliographic Info

Paper provided by European Association of Agricultural Economists in its series 2008 International Congress, August 26-29, 2008, Ghent, Belgium with number 43612.

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Date of creation: 2008
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Handle: RePEc:ags:eaae08:43612

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Keywords: technical efficiency; the CAP reform; non-monotonic inefficiency effects; production frontier; olive-farming; Agricultural and Food Policy; Crop Production/Industries;

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  1. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, Springer, vol. 20(2), pages 325-32.
  2. Hung-Jen Wang, 2002. "Heteroscedasticity and Non-Monotonic Efficiency Effects of a Stochastic Frontier Model," Journal of Productivity Analysis, Springer, Springer, vol. 18(3), pages 241-253, November.
  3. David A. Hennessy, 1998. "The Production Effects of Agricultural Income Support Policies under Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 80(1), pages 46-57.
  4. 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.
  5. Giannis Karagiannis & Vangelis Tzouvelekas, 2007. "A flexible time-varying specification of the technical inefficiency effects model," Empirical Economics, Springer, Springer, vol. 33(3), pages 531-540, November.
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Cited by:
  1. Trnkova, Gabriela & Mala, Zdenka & Vasilenko, Alexandr, 2012. "Analysis of the Effects of Subsidies on the Economic Behavior of Agricultural Businesses Focusing on Animal Production," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 4(4), December.
  2. Filippini, Massimo & Wetzel, Heike, 2013. "The Impact of Ownership Unbundling on Cost Efficiency: Empirical Evidence from the New Zealand Electricity Distribution Sector," EWI Working Papers, Energiewirtschaftliches Institut an der Universitaet zu Koeln 2013-6, Energiewirtschaftliches Institut an der Universitaet zu Koeln.

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