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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

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

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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File URL: http://purl.umn.edu/43612
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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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  1. Giannis Karagiannis & Vangelis Tzouvelekas, 2005. "A Flexible Time-Varying Specification of the Technical Inefficiency Effects Model," Working Papers 0517, University of Crete, Department of Economics.
  2. 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.
  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. Wang, Hung-Jen, 2002. "Heteroscedasticity and non-monotonic efficiency effects of a stochastic frontier model," MPRA Paper 31076, University Library of Munich, Germany.
  5. 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, vol. 20(2), pages 325-32.
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