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

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  • Lajos Baráth
  • Imre Fertő
  • Štefan Bojnec

Abstract

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‐in‐difference 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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  • Lajos Baráth & Imre Fertő & Štefan Bojnec, 2020. "The Effect of Investment, LFA and Agri‐environmental Subsidies on the Components of Total Factor Productivity: The Case of Slovenian Farms," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(3), pages 853-876, September.
    • Handle: RePEc:bla:jageco:v:71:y:2020:i:3:p:853-876
    DOI: 10.1111/1477-9552.12374
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    2. Mariarosaria Agostino & Ercan Enzo Comert & Federica Demaria & Sabrina Ruberto, 2024. "What kinds of subsidies affect technical efficiency? The case of Italian dairy farms," Agribusiness, John Wiley & Sons, Ltd., vol. 40(1), pages 116-138, January.
    3. Nicola Galluzzo, 2021. "Estimation of the impact of CAP subsidies as environmental variables on Romanian farms," Economia agro-alimentare, FrancoAngeli Editore, vol. 23(3), pages 1-24.
    4. Bojnec, Štefan & Fertő, Imre, 2022. "Do different types of Common Agricultural Policy subsidies promote farm employment?," Land Use Policy, Elsevier, vol. 112(C).
    5. Oliynyk, Oleksandr & Makohon, Vitaliy & Mishchenko, Vitaliya & Brik, Svitlana, 2020. "Ефективність Витрат На Впровадження Нових Сортів І Гібридів У Рослинництві," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 6(4), December.
    6. Frýd, Lukáš & Sokol, Ondřej, 2021. "Relationships between technical efficiency and subsidies for Czech farms: A two-stage robust approach," Socio-Economic Planning Sciences, Elsevier, vol. 78(C).
    7. Xufeng Cui & Ting Cai & Wei Deng & Rui Zheng & Yuehua Jiang & Hongjie Bao, 2022. "Indicators for Evaluating High-Quality Agricultural Development: Empirical Study from Yangtze River Economic Belt, China," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 164(3), pages 1101-1127, December.
    8. Czubak, Wawrzyniec & Pawłowski, Krzysztof Piotr & Sadowski, Arkadiusz, 2021. "Outcomes of farm investment in Central and Eastern Europe: The role of financial public support and investment scale," Land Use Policy, Elsevier, vol. 108(C).
    9. Justas Streimikis & Zhuang Miao & Tomas Balezentis, 2021. "Creation of climate‐smart and energy‐efficient agriculture in the European Union: Pathways based on the frontier analysis," Business Strategy and the Environment, Wiley Blackwell, vol. 30(1), pages 576-589, January.

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