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Subsidies and technical efficiency: An application of stochastic frontier and Random-effect Tobit models to LFA Spanish olive farms

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  • Lambarraa, Fatima
  • Kallas, Zein

Abstract

The most of Spanish olive farms are concentrated in Less-Favoured Areas (LFA) with the majority of producer areas are under Objective 1 of the EU Regional Policy. The EU has long recognized such distinctive characteristics of those holdings with a specific support measures aiming to prevent the abandonment of olive groves as well as to support sustainable development of this sector. The main objective of this study is to evaluate the impact of LFA payment on the olive farms technical efficiency. Two sample farms located in LFA (63 farms receiving LFA payment support and 99 farms do not) have been observed from 2000 to 2004. A stochastic frontier production and Random-effect Tobit models have been used. Results indicate that LFA payment, age of manager, workforce composition and farm size affect efficiency levels. The LFA payment coefficient indicates a significant negative impact on the technical efficiency of Spanish olive farms. Farms that not receive LFA payment has a technical efficiency rate 0.15 percentage units upper compared to those that receive this payment.

Suggested Citation

  • Lambarraa, Fatima & Kallas, Zein, 2009. "Subsidies and technical efficiency: An application of stochastic frontier and Random-effect Tobit models to LFA Spanish olive farms," 113th Seminar, September 3-6, 2009, Chania, Crete, Greece 58079, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaa113:58079
    DOI: 10.22004/ag.econ.58079
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    Cited by:

    1. Laureti, Tiziana & Benedetti, Ilaria & Branca, Giacomo, 2021. "Water use efficiency and public goods conservation: A spatial stochastic frontier model applied to irrigation in Southern Italy," Socio-Economic Planning Sciences, Elsevier, vol. 73(C).
    2. Basurto Hernandez, Saul & Maddison, David & Banerjee, Anindya, 2018. "The effect of PROCAMPO on farms’ technical efficiency: A Stochastic Frontier Analysis," 2018 Annual Meeting, August 5-7, Washington, D.C. 274376, Agricultural and Applied Economics Association.
    3. Trnkova, Gabriela & Mala, Zdenka & Vasilenko, Alexandr, 2012. "Analysis of the Effects of Subsidies on the Economic Behavior of Agricultural Businesses Focusing on Animal Production," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 4(4 Special), pages 1-12, December.
    4. Minviel, Jean Joseph & Latruffe, Laure, 2014. "Meta-regression analysis of the impact of agricultural subsidies on farm technical efficiency," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182767, European Association of Agricultural Economists.
    5. Khafagy, Amr & Vigani, Mauro, 2022. "Technical change and the Common Agricultural Policy," Food Policy, Elsevier, vol. 109(C).

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