Subsidies and technical efficiency of Czech food processing industry

Zdeňka Náglová and Marie Šimpachová Pechrová
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Marie Šimpachová Pechrová: Institute of Agricultural Economics and Information, Prague, Czech Republic

Agricultural Economics, 2019, vol. 65, issue 4, 151-159

Abstract: At present, the New Common Agricultural Policy for the period 2021-2027 has been currently formulated. Future of the agriculture and food industry is now widely discussed. These sectors play an important role, and it is necessary to maintain their competitiveness and sustainability. In this context, the main aim of the paper is to evaluate the technical efficiency of food processing firms by using Stochastic Frontier Analysis applying True Fixed Effect model on production function. It was identified, that increase of subsidies cause a slight increase in the mean of technical inefficiency. Also, the technical efficiency of the firms without subsidies is higher than in the subsidised firms and differs statistically significantly in the time and also with respect to the region of the firm. To summarise, the effect of subsidies is negative as the obtaining of the subsidies is not related to higher technical efficiency.

Keywords: food industry; manufacturing; Stochastic Frontier Function; subsidies; technical efficiency (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:caa:jnlage:v:65:y:2019:i:4:id:234-2018-agricecon

DOI: 10.17221/234/2018-AGRICECON

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