IDEAS home Printed from https://ideas.repec.org/p/ags/inrasl/211019.html
   My bibliography  Save this paper

Farm expansion in Lithuania after accession to the EU: The role of CAP payments in alleviating potential credit constraints

Author

Listed:
  • Latruffe, Laure
  • Davidova, Sophia
  • Douarin, Elodie
  • Gorton, Matthew

Abstract

The impact of the introduction of EU Single Area Payments (SAP) on farm expansion strategy in Lithuania is investigated, utilizing farm accounting and survey data. The introduction of the SAP has a positive influence on farmers’ intentions to expand their area compared to a baseline scenario of the hypothetical continuation of pre-accession policy. The switch in policy has a more pronounced effect on farms that were previously credit constrained. While the SAP has been presented as a support that is decoupled from production, its introduction may have ex post coupled effects, through an income multiplier effect on credit constrained farmers

Suggested Citation

  • Latruffe, Laure & Davidova, Sophia & Douarin, Elodie & Gorton, Matthew, 2008. "Farm expansion in Lithuania after accession to the EU: The role of CAP payments in alleviating potential credit constraints," Working Papers 211019, Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2).
    • Handle: RePEc:ags:inrasl:211019
    DOI: 10.22004/ag.econ.211019
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/211019/files/WP%20SMART-LERECO%2008-06.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.211019?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. repec:ebl:ecbull:v:5:y:2007:i:12:p:1-12 is not listed on IDEAS
    2. Laure Latruffe, 2005. "The Impact of Credit Market Imperfections on Farm Investment in Poland," Post-Communist Economies, Taylor & Francis Journals, vol. 17(3), pages 349-362.
    3. Swinnen, Johan F. M. & Gow, Hamish R., 1999. "Agricultural credit problems and policies during the transition to a market economy in Central and Eastern Europe," Food Policy, Elsevier, vol. 24(1), pages 21-47, February.
    4. Martin Petrick, 2004. "A microeconometric analysis of credit rationing in the Polish farm sector," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 31(1), pages 77-101, March.
    5. Sadoulet, Elisabeth & Janvry, Alain de & Davis, Benjamin, 2001. "Cash Transfer Programs with Income Multipliers: PROCAMPO in Mexico," World Development, Elsevier, vol. 29(6), pages 1043-1056, June.
    6. Jason G. Cummins & Kevin A. Hassett & Stephen D. Oliner, 2006. "Investment Behavior, Observable Expectations, and Internal Funds," American Economic Review, American Economic Association, vol. 96(3), pages 796-810, June.
    7. Raiser, Martin & Schaffer, Mark & Schuchhardt, Johannes, 2004. "Benchmarking structural change in transition," Structural Change and Economic Dynamics, Elsevier, vol. 15(1), pages 47-81, March.
    8. Steven M. Fazzari & R. Glenn Hubbard & Bruce C. Petersen, 1988. "Financing Constraints and Corporate Investment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(1), pages 141-206.
    9. R. Glenn Hubbard, 1998. "Capital-Market Imperfections and Investment," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 193-225, March.
    10. Aggarwal, Raj & Zong, Sijing, 2006. "The cash flow-investment relationship: International evidence of limited access to external finance," Journal of Multinational Financial Management, Elsevier, vol. 16(1), pages 89-104, February.
    11. Junior R. Davis & Angela Gaburici, 1999. "Rural Finance and Private Farming in Romania," Europe-Asia Studies, Taylor & Francis Journals, vol. 51(5), pages 843-869.
    12. Calem, Paul S & Rizzo, John A, 1995. "Financing Constraints and Investment: New Evidence from Hospital Industry Data," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(4), pages 1002-1014, November.
    13. Takeo Hoshi & Anil Kashyap & David Scharfstein, 1991. "Corporate Structure, Liquidity, and Investment: Evidence from Japanese Industrial Groups," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(1), pages 33-60.
    14. Tobin, James, 1969. "A General Equilibrium Approach to Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 15-29, February.
    15. Pavel Ciaian & Johan F.M. Swinnen, 2006. "Land Market Imperfections and Agricultural Policy Impacts in the New EU Member States: A Partial Equilibrium Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(4), pages 799-815.
    16. Fabio R. Chaddad & Michael L. Cook & Thomas Heckelei, 2005. "Testing for the Presence of Financial Constraints in US Agricultural Cooperatives: An Investment Behaviour Approach," Journal of Agricultural Economics, Wiley Blackwell, vol. 56(3), pages 385-397, December.
    17. Sadoulet, Elisabeth & Davis, Benjamin & de Janvry, Alain, 2001. "Cash transfer programs with income multipliers," FCND briefs 99, International Food Policy Research Institute (IFPRI).
    18. Catherine Benjamin & Euan Phimister, 2002. "Does Capital Market Structure Affect Farm Investment? A Comparison using French and British Farm-Level Panel Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(4), pages 1115-1129.
    19. Alessandra Guariglia & Robert Carpenter, 2007. "Investment behavior, observable expectations, and internal funds: a comment on Cummins et al. (AER, 2006)," Economics Bulletin, AccessEcon, vol. 5(12), pages 1-12.
    20. Bakucs, Lajos Zoltán & Ferto, Imre & Fogarasi, József, 2009. "Investment and financial constraints in Hungarian agriculture," Economics Letters, Elsevier, vol. 104(3), pages 122-124, September.
    21. Dirk J. Bezemer, 2002. "Credit Markets for Agriculture in the Czech Republic," Europe-Asia Studies, Taylor & Francis Journals, vol. 54(8), pages 1301-1317.
    22. J. Maurice Clark, 1917. "Business Acceleration and the Law of Demand: A Technical Factor in Economic Cycles," Journal of Political Economy, University of Chicago Press, vol. 25(3), pages 217-217.
    23. Pavel Ciaian & Johan F.M. Swinnen, 2006. "Land Market Imperfections and Agricultural Policy Impacts in the New EU Member States: A Partial Equilibrium Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(4), pages 799-815.
    24. Ralph Bierlen & Allen M. Featherstone, 1998. "Fundamental q, Cash Flow, and Investment: Evidence from Farm Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(3), pages 427-435, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jean Joseph Minviel & Timo Sipiläinen, 2018. "Dynamic stochastic analysis of the farm subsidy-efficiency link: evidence from France," Journal of Productivity Analysis, Springer, vol. 50(1), pages 41-54, October.
    2. Jan Fałkowski & Pavel Ciaian & d'Artis Kancs, 2009. "Access to Credit, Factor Allocation and Farm Productivity: Evidence From the CEE Transition Economies," Working Papers 2009-12, Faculty of Economic Sciences, University of Warsaw.
    3. Wawrzyniec Czubak & Krzysztof Piotr Pawłowski, 2024. "The Impact of Agricultural Investments on the Economic Efficiency of Production Factors: An Empirical Study of the Wielkopolska Voivodeship," Agriculture, MDPI, vol. 14(12), pages 1-16, December.
    4. Van Herck, Kristine & Vranken, Liesbet, 2012. "Direct Payments and Land Rents: Evidence from New Member States," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126777, International Association of Agricultural Economists.
    5. Minviel, Jean Joseph & De Witte, Kristof, 2017. "The influence of public subsidies on farm technical efficiency: A robust conditional nonparametric approach," European Journal of Operational Research, Elsevier, vol. 259(3), pages 1112-1120.
    6. Matthews, Alan & Salvatici, Luca & Scoppola, Margherita, 2017. "Trade Impacts of Agricultural Support in the EU," Commissioned Papers 252767, International Agricultural Trade Research Consortium.
    7. Artiom Volkov & Tomas Balezentis & Mangirdas Morkunas & Dalia Streimikiene, 2019. "In a Search for Equity: Do Direct Payments under the Common Agricultural Policy Induce Convergence in the European Union?," Sustainability, MDPI, vol. 11(12), pages 1-15, June.
    8. Spiegel, Alisa & Coletta, Attilio & Severini, Simone, 2022. "The distortive effect of organic payments: An example of policy failure in the case of hazelnut plantation," Land Use Policy, Elsevier, vol. 119(C).
    9. O’Toole, Conor & Hennessy, Thia, 2015. "Do decoupled payments affect investment financing constraints? Evidence from Irish agriculture," Food Policy, Elsevier, vol. 56(C), pages 67-75.
    10. Pavel Ciaian & Jan Fałkowski & D’Artis Kancs, 2012. "Productivity and credit constraints: A firm-level propensity score evidence for agricultural farms in central and east European countries," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 62(4), pages 459-487, December.
    11. Tomas Baležentis & Aistė Galnaitytė & Irena Kriščiukaitienė & Virginia Namiotko & Lina Novickytė & Dalia Streimikiene & Rasa Melnikiene, 2019. "Decomposing Dynamics in the Farm Profitability: An Application of Index Decomposition Analysis to Lithuanian FADN Sample," Sustainability, MDPI, vol. 11(10), pages 1-15, May.
    12. Legrand D. F, Saint-Cyr, 2017. "Farm heterogeneity and agricultural policy impacts on size dynamics: evidence from France," Working Papers SMART 17-04, INRAE UMR SMART.
    13. BOULANGER Pierre & PHILIPPIDIS George & URBAN Kirsten, 2017. "Assessing potential coupling factors of European decoupled payments with the Modular Agricultural GeNeral Equilibrium Tool (MAGNET)," JRC Research Reports JRC104276, Joint Research Centre.
    14. Saint-Cyr, Legrand D. F., 2016. "Accounting for farm heterogeneity in the assessment of agricultural policy impacts on structural change," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235778, Agricultural and Applied Economics Association.
    15. Marie-Line Duboz & Julie Le Gallo, 2011. "Are EU-15 and CEEC agricultural exports in competition? Evidence for 1995-2005," Economics Bulletin, AccessEcon, vol. 31(1), pages 134-146.
    16. 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).
    17. Sauer, Johannes & Davidova, Sophia & Latruffe, Laure, 2009. "Determinants of the Fallowing Decision in Kosovo," 83rd Annual Conference, March 30 - April 1, 2009, Dublin, Ireland 51072, Agricultural Economics Society.
    18. Ferto, Imre & Bakucs, Lajos Zoltan & Bojnec, Stefan & Latruffe, Laure, 2011. "Investment and Financial Constraints in European Agriculture: Evidence from France, Hungary and Slovenia," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114357, European Association of Agricultural Economists.
    19. 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.
    20. Saint-Cyr, Legrand D. F., 2016. "Farm segmentation and agricultural policy impacts on structural change: evidence from France," 149th Seminar, October 27-28, 2016, Rennes, France 244789, European Association of Agricultural Economists.
    21. Jana LOSOSOVÁ & Radek ZDENĚK & Jaroslav SVOBODA, 2020. "Tangible fixed assets in Czech small and middle-sized farms Abstract: The aim of this paper is to analyse the development, structure and efficiency of tangible fixed assets in the Czech farms and iden," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 11, pages 236-251, June.
    22. Legrand D. F. Saint‐Cyr, 2022. "Heterogeneous farm‐size dynamics and impacts of subsidies from agricultural policy: Evidence from France," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(3), pages 893-923, September.
    23. Luigi Biagini & Simone Severini, 2021. "The role of Common Agricultural Policy (CAP) in enhancing and stabilising farm income: an analysis of income transfer efficiency and the Income Stabilisation Tool," Papers 2104.14188, arXiv.org.
    24. Luigi Biagini & Federico Antonioli & Simone Severini, 2020. "The Role of the Common Agricultural Policy in Enhancing Farm Income: A Dynamic Panel Analysis Accounting for Farm Size in Italy," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(3), pages 652-675, September.
    25. Marconi, V. & Raggi, M. & Viaggi, D. & Lefebvre, M. & Gomez y Paloma, Sergio, 2015. "The impact of the 2013 Common Agricultural Policy reform on farmer's investment decisions: an ex-ante evaluation," 2015 Conference, August 9-14, 2015, Milan, Italy 212225, International Association of Agricultural Economists.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Latruffe, Laure & Davidova, Sophia & Douarin, Elodie & Gorton, Matthew, 2008. "Can the CAP payments facilitate the growth of individual farms in the New Member States post-EU accession?," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 43611, European Association of Agricultural Economists.
    2. Latruffe, Laure & Davidova, Sophia & Douarin, Elodie & Gorton, Matthew, 2008. "Can the CAP payments facilitate the growth of individual farms in the NMS post-EU accession?," 82nd Annual Conference, March 31 - April 2, 2008, Royal Agricultural College, Cirencester, UK 36861, Agricultural Economics Society.
    3. Ciaian, Pavel & Swinnen, Johan F.M., 2008. "Credit Market Imperfections And The Distribution Of Policy Rents: The Common Agricultural Policy In The New Eu Member States," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6591, European Association of Agricultural Economists.
    4. Pavel Ciaian & d’Artis Kancs, 2011. "The Impact Of Food Price Shock On Heterogeneous Credit Constrained Firms," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 82(2), pages 115-137, June.
    5. Jean-Bernard Chatelain, 2003. "Structural modelling of financial constraints on investment: where do we stand?," Chapters, in: Paul Butzen & Catherine Fuss (ed.), Firms’ Investment and Finance Decisions, chapter 2, pages 40-58, Edward Elgar Publishing.
    6. Coad, Alex, 2010. "Neoclassical vs evolutionary theories of financial constraints: Critique and prospectus," Structural Change and Economic Dynamics, Elsevier, vol. 21(3), pages 206-218, August.
    7. Fertő, Imre & Bakucs, Lajos Zoltán & Fogarasi, József, 2007. "A puha költségvetési korlát és a hitelpiaci tökéletlenségek hatása a beruházásokra a magyar mezőgazdaságban [The effect of soft budget constraint and credit-market imperfections on investments in H," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(4), pages 322-333.
    8. Ciaian, Pavel & Fa?kowski, Jan & d’Artis, Kanc & Pokrivcak, Jan, 2011. "Productivity and Credit Constraints: Firm-Level Evidence from Propensity Score Matching," Factor Markets Working Papers 99, Centre for European Policy Studies.
    9. Stijn Claessens & M Ayhan Kose, 2018. "Frontiers of macrofinancial linkages," BIS Papers, Bank for International Settlements, number 95, October –.
    10. MORIKAWA Masayuki, 2012. "Financial Constraints in Intangible Investments: Evidence from Japanese firms," Discussion papers 12045, Research Institute of Economy, Trade and Industry (RIETI).
    11. repec:lic:licosd:18307 is not listed on IDEAS
    12. Chaddad, Fabio Ribas & Heckelei, Thomas, 2003. "Access To Capital And Firm-Level Investment Behavior In Food Industries: A Comparison Of Cooperatives And Publicly Traded Firms," 2003 Annual meeting, July 27-30, Montreal, Canada 22205, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Pavel Ciaian & Jan Fałkowski & D’Artis Kancs, 2012. "Productivity and credit constraints: A firm-level propensity score evidence for agricultural farms in central and east European countries," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 62(4), pages 459-487, December.
    14. Manzur Quader & Karl Taylor, 2018. "Corporate efficiency, credit status and investment," The European Journal of Finance, Taylor & Francis Journals, vol. 24(6), pages 439-457, April.
    15. François-Serge Lhabitant & Olivier Tinguely, 2002. "Financial Constraints and Investment: the Swiss Case," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 138(II), pages 137-163, June.
    16. Laure Latruffe & . Hampshire, 2004. "Investment and financial constraints of Polish farmers," Post-Print hal-02283463, HAL.
    17. Sevcan Yesiltas, 2009. "Financing Constraints and Investment: The Case of Turkish Manufacturing Firms," 2009 Meeting Papers 874, Society for Economic Dynamics.
    18. Hiona Balfoussia & Heather D. Gibson, 2019. "Firm investment and financial conditions in the euro area: evidence from firm-level data," Applied Economics Letters, Taylor & Francis Journals, vol. 26(2), pages 104-110, January.
    19. Vlieghe, Gertjan & Stephen Bond & Alexander Klemm & Rain Newton-Smith & Murtaza Syed, 2003. "The roles of expected profitability, Tobin's Q and cash flow in econometric models of company investment," Royal Economic Society Annual Conference 2003 212, Royal Economic Society.
    20. Jaewoon Koo & Sunwoo Shin, 2004. "Financial Liberalization and Corporate Investments: Evidence from Korean Firm Data," Asian Economic Journal, East Asian Economic Association, vol. 18(3), pages 277-292, September.
    21. Pavel Ciaian & Tomáš Ratinger, 2009. "Income Distribution Effects of EU Rural Development Policies: The Case of Farm Investment Support," EERI Research Paper Series EERI_RP_2009_01, Economics and Econometrics Research Institute (EERI), Brussels.

    More about this item

    Keywords

    Agricultural and Food Policy;

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:inrasl:211019. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/inrapfr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.