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Levelling the playing field for European Union agriculture: Does the Common Agricultural Policy impact homogeneously on farm productivity and efficiency?

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  • Quiroga, Sonia
  • Suárez, Cristina
  • Fernández-Haddad, Zaira
  • Philippidis, George

Abstract

Originally conceived as a post-war policy vehicle for ensuring agricultural self-sufficiency, the Common Agricultural Policy (CAP) has evolved into a multifunctional instrument designed to satisfy a diverse portfolio of European Union (EU) policy objectives including nature protection. Notwithstanding, whilst the CAP has become more environmental and socially responsible, it is still expected to deliver an efficient farm production system capable of competing on world markets. The current paper combines a farm business panel dataset for 98 EU territories with a Stochastic Frontier Analysis (SFA) approach, to assess the impact of four contemporary broad categories of CAP subsidy programs on efficiency and environmental sustainability. In accordance with the literature, this study more correctly defines inputs as “facilitating”, whilst following recent methodological developments, crop-subsidies are treated as an endogenous strategic variable in the production function. Comparing between two discrete time periods, further tests are conducted to examine the hypothesis of technical efficiency convergence across european territories. The results suggest that first pillar crop subsidies and pillar two environmental programs generate a disincentive effect on productivity, whilst in general, the CAP promotes technical efficiency convergence within Europe.

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  • Quiroga, Sonia & Suárez, Cristina & Fernández-Haddad, Zaira & Philippidis, George, 2017. "Levelling the playing field for European Union agriculture: Does the Common Agricultural Policy impact homogeneously on farm productivity and efficiency?," Land Use Policy, Elsevier, vol. 68(C), pages 179-188.
    • Handle: RePEc:eee:lauspo:v:68:y:2017:i:c:p:179-188
    DOI: 10.1016/j.landusepol.2017.07.057
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    13. Khafagy, Amr & Vigani, Mauro, 2022. "Technical change and the Common Agricultural Policy," Food Policy, Elsevier, vol. 109(C).
    14. Jingdong Li & Qingning Lin, 2022. "Can the Adjustment of China’s Grain Purchase and Storage Policy Improve Its Green Productivity?," IJERPH, MDPI, vol. 19(10), pages 1-24, May.
    15. Radek Zdeněk & Jana Lososová, 2020. "Investments of Czech farms located in less favoured areas after EU accession," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 66(2), pages 55-64.
    16. Quiroga, Sonia & Suarez, Cristina & Ficko, Andrej & Feliciano, Diana & Bouriaud, Laura & Brahic, Elodie & Deuffic, Philippe & Dobsinska, Zuzana & Jarsky, Vilem & Lawrence, Anna & Nybakk, Erlend, 2019. "What influences European private forest owners' affinity for subsidies?," Forest Policy and Economics, Elsevier, vol. 99(C), pages 136-144.
    17. Apata, Temidayo, 2021. "Effect of public spending on agricultural productivity in Nigeria (1981-2018)," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 30(2), pages 1-21.
    18. Alessandro Magrini, 2021. "A Stochastic Frontier Model to Assess Agricultural Eco-efficiency of European Countries in 1990–2019," International Journal of Statistics and Probability, Canadian Center of Science and Education, vol. 10(4), pages 138-138, July.
    19. Hloušková, Z. & Ženíšková, P. & Prášilová, M., 2018. "Comparison of Agricultural Costs Prediction Approaches," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 10(1).
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