The impact of the 1999 CAP reforms on the efficiency of the COP sector in Spain

Abstract

The cereal, oilseeds, and protein crop sector (COP) occupies a prominent position within the European Union's agricultural sector. Within Spain, the COP sector accounts for almost a third of total Agricultural Guidance and Guarantee Fund expenses, and a half of the utilized agricultural area. The COP sector is not only relevant because of its physical and economic magnitude, but also because of the political attention it receives.The Common Agricultural Policy reforms that occurred during the 1990s paid special attention to this sector. This paper aims to determine the impacts of Agenda 2000 on a sample of Spanish COP farmers' production decisions by using an output-oriented stochastic distance function. The distance function allows for an assessment of the reformmotivated changes on total output, input used, input composition and crop mix. It also permits an assessment of the impacts of the reform on farms' technical efficiency.Results show that the reform has shifted the production frontier inward and changed output composition in favor of voluntary set aside land. With respect to input composition, Agenda 2000 induced a decrease in land, fertilizers, pesticides and other inputs in favor of labor. In addition, Agenda 2000 has had a negative impact on technical efficiency. IntroductionThe cereal, oilseeds and protein crop (COP) sector occupies a prominent position within the European Union's (EU) agricultural sector. This sector represented The EU is the third most important cereal producer in the world (behind China and the US) and accounts for 14.3% of total production, as well as 24.1% of world wheat exports and 42.9% of world barley exports (FAOSTAT, 2004). The main COP producing countries within the EU are France and Germany, followed by Italy, Poland and Spain.1 The rate of self-sufficiency in the EU is on the order of 118% for cereals, 80% for protein crops and 44% for oilseeds. The Spanish COP sector contributes 11%to the final agricultural output in Spain and is the third most frequent farming type among Spanish farms, after citrus and olive. Within Spain, the COP sector accounts for 28% of total EAGGF expenses, 48% of the UAA, and 37% of total agricultural area Compared to other EU producers, Spanish COP yields are lower with high annual variation due to uneven rainfall (Eurostat, 2007) 2 . Further, the average Spanish COP farm size (52.71 ha) is above the EU average (46.3 ha) (FAO, 2006; and Eurostat, 2008), although it is below the average farm size in France and Germany, on the order of 78.11 ha and 64.09 ha, respectively (Eurostat, 2008).The COP sector is not only relevant because of its physical and economic magnitude, but also because of the political attention it receives. The Common Agricultural Policy (CAP) reforms that occurred during the 1990s involved specific policies for this sector. The reform in 1992 and Agenda 2000 involved reductions in 1 France ranks first among European countries in COP production accounting for 23.3% of total production followed by Germany with 15%, an...

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