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Productivity and Subsidies in European Union Countries: An Analysis for Dairy Farms Using Input Distance Frontiers

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  • Latruffe, Laure
  • Bravo-Ureta, Boris E.
  • Moreira, Victor H.
  • Desjeux, Yann
  • Dupraz, Pierre

Abstract

The major objective of this paper is to examine the association between agricultural subsidies and farm efficiency using data from the European Farm Accountancy Data Network (FADN) for operations specializing on dairy. The analysis covers the 18 year period going from 1990 to 2007 and includes the following seven countries: Denmark; France; Germany; Ireland; Spain; the Netherlands; and the United Kingdom. Separate translog stochastic input distance frontiers are estimated for each country. The key results show high average technical efficiency (TE) ranging from 91.8% to 94.9%, average rates of technological change going from -0.6% to 1.4%, and increasing returns to scale (1.24 to 1.44) across all seven countries. In addition, higher subsidy and hired labor dependence are found to be significantly associated with higher technical inefficiency across all seven countries. Moreover, the latest Common Agricultural Policy (CAP) regime introducing fully decoupled payments has reduced TE in all countries considered except Denmark.

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Bibliographic Info

Paper provided by European Association of Agricultural Economists in its series 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland with number 114396.

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Date of creation: 2011
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Handle: RePEc:ags:eaae11:114396

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Keywords: Subsidies; CAP; technical efficiency; technological progress; returns to scale; Europe; dairy production; input distance frontiers; Livestock Production/Industries; Productivity Analysis;

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References

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Cited by:
  1. Rizov, Marian & Pokrivcak, Jan & Ciaian, Pavel, 2013. "CAP Subsidies and the Productivity of EU Farms," Working Papers 146962, Factor Markets, Centre for European Policy Studies.
  2. 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, vol. 4(4), December.

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