Subsidies and agricultural productivity in the EU

Garrone, Maria; Emmers, Dorien; Lee, Hyejin; Olper, Alessandro; Swinnen, Johan

doi:10.1111/agec.12526

Cited by 77 publications

(92 citation statements)

References 64 publications

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“…Among the few studies that tested the effect of implementing CAP subsidies on the structure of production, farm income, performance, and sustainability of the agricultural sector are those by Sarov and Kostenarov [41], Garrone et al [42], Ciaian et al [43], Kravčáková Vozárová and Kotulič [44], Rizov et al [45], and Bojnec and Ferto [46].…”

Section: Introductionmentioning

confidence: 99%

Assessing Impacts of CAP Subsidies on Financial Performance of Enterprises in Slovak Republic

2020

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Sustainability is a particularly crucial factor in policy formulation and analysis, including in the EU’s common agricultural policy. The common agricultural policy, through a subsidy policy, has caused a significant proportion of public funding to flow to agricultural subsidies, so it is appropriate to focus on the effect of these subsidies in the context of the sustainable development of EU agriculture. The impact of agricultural subsidies on business performance is of interest to policy makers. In agrarian practice, insufficient attention is paid to the legal form of agricultural performance, so our economic analysis focused on this area of research. The aim of the paper was to evaluate the effect of financial support in the form of subsidies resulting from the EU’s common agricultural policy and to verify its connection with the performance of agricultural enterprises in terms of the legal form in the context of sustainable development of the agricultural sector in Slovakia. No statistically significant linear correlation was found between farms’ performance results and the volume of subsidies per hectare of agricultural land for each legal form throughout the reporting period. In each analyzed year, business companies achieved a better overall assessment than agricultural cooperatives based on monitored parameters.

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Section: Introductionmentioning

confidence: 99%

Assessing Impacts of CAP Subsidies on Financial Performance of Enterprises in Slovak Republic

2020

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“…Numerous authors have investigated the impact of subsidies on economic performance (e.g. Latruffe et al, 2009;Zhu and Oude Lansink, 2010;Zhu et al, 2012;Bojnec and Latruffe, 2013;Mary, 2013;Rizov et al, 2013;Latruffe et al, 2017;Minviel and Latruffe, 2017;Garrone et al, 2019). In this section, we briefly review the methods most commonly used by researchers and the main findings of selected studies.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Several studies have examined the effect of AE schemes on farm performance (Pufahl and Weiss, 2009;Arata and Sckokai, 2016;D'Alberto et al, 2018), although the number of studies that have examined the effect of LFA subsidies is very limited (Mary, 2013). Garrone et al (2019) argue that the impact of LFA payments on agricultural productivity is not clear ex ante. On the one hand, LFA payments may keep inefficient farms going, thereby reducing efficiency (Latruffe and Desjeux, 2016).…”

Section: The Effect Of Investment and Rd (Lfa And Ae) Subsidiesmentioning

confidence: 99%

The Effect of Investment, LFA and Agri‐environmental Subsidies on the Components of Total Factor Productivity: The Case of Slovenian Farms

Baráth¹,

Fertő²,

Bojnec³

2020

J Agricultural Economics

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The effect of subsidies on the performance of farms has received a great deal of attention in the literature, although results are inconclusive. Furthermore, much of the related literature examines the effect of subsidies only on technical efficiency (TE). We examine the effect of different types of subsidies on the different components of total factor productivity (TFP) in Slovenian agriculture over the period 2006-2013. We first estimate a Random Parameter Stochastic production frontier model. Then, based on the estimates of this model, we calculate and decompose the TFP index into TE, scale efficiency and technological change. Third, we apply combined difference-indifference and a matching estimator to examine the effect of investment, less favoured area (LFA) and agri-environmental (AE) subsidies on the different components of TFP. In our case, these subsidies are found to have no significant effect on either TFP or on its components.

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“…Therefore, unlike their research project, the analysis presented in this paper covers a broader time frame (12 years) and a larger territory (eight countries). According to some studies, while subsidies can drive an increase in input productivity, this mainly depends on their nature [45]. Therefore, this paper focuses on investment mechanisms which can enhance productivity and reduce costs (and, as a consequence, improve profitability), as confirmed by numerous studies, including those by Boulanger and Philippidis [47] and Dudu and Kristkova [48].…”

Section: Introductionmentioning

confidence: 99%

“…However, on the other hand, a number of papers exist that confirm the positive effect of subsidies on farm efficiency [42][43][44]. These contradictions could result from differences in agricultural characteristics between the countries, and from structural differences between intervention mechanisms [45]. The dual impact of subsidies on changes in efficiency is particularly noticeable in the case of payments decoupled from production volumes [46].…”

Section: Introductionmentioning

confidence: 99%

Sustainable Economic Development of Farms in Central and Eastern European Countries Driven by Pro-investment Mechanisms of the Common Agricultural Policy

Czubak

Pawłowski

2020

Agriculture

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Improvements in sustainability at the farm level are the basic driver of agricultural sustainability at the macro level. This is a challenge that can only be met by farms which efficiently process inputs into products. The increase in the efficiency of European farms is largely conditioned by measures taken under the Common Agricultural Policy (CAP), especially its second pillar. The purpose of this study was to determine the net effect of pro-investment instruments available under the second pillar of the CAP in selected Central and Eastern European countries. Unpublished Farm Accountancy Data Network (FADN) microdata provided by the European Commission’s Directorate-General for Agriculture and Rural Development (DG AGRI) were used as the source material. The study presented in this paper is unique in that the research tasks are based on unpublished microdata of selected Central and Eastern European farms. The study relied on the Propensity Score Matching approach; the net effect of pro-investment mechanisms was analyzed using productivity and profitability indicators calculated for farms which have been keeping FADN records for a continuous period of no less than 6 years. As shown by the study, structural funds available under the CAP clearly provided an investment incentive for farms. The conclusion from the assessment of changes in the availability of productive inputs is that the beneficiaries reported a greater increase in fixed asset value and in farm area in all countries except for the Czech Republic and Slovakia. The comparative analysis of countries covered by this study failed to clearly confirm that labor is substituted with capital to a significant extent. Every country covered by this study experienced a noticeable negative net effect on both the productivity and profitability of capital. When considering all the countries, the beneficiary group has no clear advantage over the control group in terms of changes in land and labor productivity and profitability (a statistically significant positive effect was recorded for land productivity and profitability in Slovenia). As regards labor, a statistically significant positive net effect (a difference in growth rate between the beneficiary group and the control group) was recorded in Slovenia, but also in Poland, where beneficiary farms reported a greater increment in labor profitability and reduced the negative difference in labor productivity.

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Subsidies and agricultural productivity in the EU

Cited by 77 publications

References 64 publications

Assessing Impacts of CAP Subsidies on Financial Performance of Enterprises in Slovak Republic

Assessing Impacts of CAP Subsidies on Financial Performance of Enterprises in Slovak Republic

The Effect of Investment, LFA and Agri‐environmental Subsidies on the Components of Total Factor Productivity: The Case of Slovenian Farms

Sustainable Economic Development of Farms in Central and Eastern European Countries Driven by Pro-investment Mechanisms of the Common Agricultural Policy

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