Subsidies and Technical Efficiency in Agriculture: Evidence from European Dairy Farms

Laure Latruffe, Boris Bravo-Ureta, Alain Carpentier, Yann Desjeux and Víctor H. Moreira

American Journal of Agricultural Economics, 2017, vol. 99, issue 3, 783-799

Abstract: The objective of this article is to examine the association between agricultural subsidies and dairy farm technical efficiency in the European Union, and in so doing we make novel contributions to the literature. We include in the analysis nine diverse western European Union (EU) countries over an 18-year period (1990–2007) encompassing the various Common Agricultural Policy (CAP) reforms enacted since the inception of the EU. Further, we account for input endogeneity using an original method of moments estimator. Our results show that the effect of subsidies on technical efficiency may be positive, null, or negative, depending on the country. The analysis reveals that the introduction of decoupling with the 2003 CAP reform weakens the effect that subsidies have on technical efficiency.

Keywords: Dairy production; endogeneity; European Union; technical efficiency; stochastic production frontier; subsidies (search for similar items in EconPapers)
JEL-codes: D24 Q12 Q18 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (72)

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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:99:y:2017:i:3:p:783-799.

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