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Impact of CAP Direct Payments on French Farms’ Managerial Efficiency

  • Latruffe, Laure
  • Guyomard, Herve
  • Le Mouel, Chantal

This paper investigates the relationship between CAP direct payments and managerial efficiency for French crop and beef farms. Managerial efficiency scores are calculated using a four-step approach that allows to disentangle managerial inefficiency from other technical inefficiency components, notably what is due to unfavourable environment conditions. Then managerial efficiency scores are regressed over a set of explanatory variables, including CAP direct payments. Our empirical application, based on individual farm data and meteorological data at the municipality level for the year 2000, shows that there is a substantial component of inefficiency that is due to unfavourable conditions. Moreover, there is a significant negative relationship between managerial efficiency and CAP direct payments for crop farms, but a positive relationship for livestock farms. The type of payments also matter, with area-based and Less Favoured Area payments reducing crop farms’ efficiency but headage and agri-environmental payments increasing beef farms’ efficiency.

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File URL: http://purl.umn.edu/44144
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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 44144.

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Date of creation: 2008
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Handle: RePEc:ags:eaae08:44144
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  1. Martin, John P & Page, John M, Jr, 1983. "The Impact of Subsidies on X-Efficiency in LDC Industry: Theory and an Empirical Test," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 608-17, November.
  2. Martin, John P, 1978. "X-inefficiency, Managerial Effort and Protection," Economica, London School of Economics and Political Science, vol. 45(179), pages 273-86, August.
  3. Hervé Guyomard & Chantal Le Mouël & Alexandre Gohin, 2001. "Instruments de soutien interne des revenus agricoles et effets de distorsion sur les échanges. Un modèle avec libre entrée et endogénéisation du prix de la terre," Revue Économique, Programme National Persée, vol. 52(3), pages 673-682.
  4. Rezitis, Anthony N. & Tsiboukas, Kostas & Tsoukalas, Stauros, 2003. "Investigation of Factors Influencing the Technical Efficiency of Agricultural Producers Participating in Farm Credit Programs: The Case of Greece," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 35(03), December.
  5. Konstantinos Giannakas & Richard Schoney & Vangelis Tzouvelekas, 2001. "Technical Efficiency, Technological Change and Output Growth of Wheat Farms in Saskatchewan," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 49(2), pages 135-152, 07.
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