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The role of public subsidies on farms’ managerial efficiency: An application of a five-stage approach to France

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Author Info
Laure Latruffe
Hervé Guyomard
Chantal Le Mouël

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Abstract

This paper applies a five-step approach to the investigation of the relationship between public subsidies, namely CAP direct payments, and managerial efficiency for French COP and beef farms in 2000. Managerial efficiency scores are calculated using a four-step approach that allows disentangling managerial inefficiency from unfavourable external conditions. Then, in a fifth stage, managerial efficiency scores are regressed over a set of explanatory variables, including CAP direct payments. Using individual farm data and meteorological data at the municipality level, we show that there is a non negligible component of inefficiency that is due to unfavourable conditions, and there is a strong significant negative relationship between managerial efficiency and CAP direct payments.

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Paper provided by INRA UMR SMART in its series Working Papers SMART - LERECO with number 200905.

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Date of creation: 2009
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Handle: RePEc:rae:wpaper:200905

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Keywords: technical efficiency; managerial efficiency; direct payments; farms; France;

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    Other versions:
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  17. Mahadevan, Renuka, 2008. "The high price of sweetness: The twin challenges of efficiency and soil erosion in Fiji's sugar industry," Ecological Economics, Elsevier, vol. 66(2-3), pages 468-477, June. [Downloadable!] (restricted)
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