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CAP subsidies and productivity of the EU farms

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  • Rizov, Marian
  • Pokrivcak, Jan
  • Ciaian, Pavel

Abstract

The paper investigates the impact of the Common Agricultural Policy (CAP) subsidies on farm total factor productivity (TFP) in the European Union (EU). We employ a structural semi-parametric estimation algorithm directly incorporating the effect of subsidies into a model of unobserved productivity. We empirically study the effects using the Farm Accountancy Data Network (FADN) samples for the EU-15 countries. Our main findings are clear: subsidies impact negatively farm productivity in the period before the decoupling reform was implemented; after decoupling the effect of subsidies on productivity is more nuanced as in several countries it turned positive.

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File URL: http://purl.umn.edu/124970
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Paper provided by International Association of Agricultural Economists in its series 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil with number 124970.

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Date of creation: 06 Jun 2012
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Handle: RePEc:ags:iaae12:124970

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Keywords: CAP subsidies; investment; productivity; micro data; EU farms; Agricultural and Food Policy; Agricultural Finance; Industrial Organization; Productivity Analysis; D24; L00; Q12; Q18;

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