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The role of public subsidies on farms’ managerial efficiency: An application of a five-stage approach to France

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  • Laure Latruffe
  • Hervé Guyomard
  • Chantal Le Mouël

Abstract

This paper applies a five-step approach to the investigation of the relationship between public subsidies, namely CAP direct payments, and managerial efficiency for French COP and beef farms in 2000. Managerial efficiency scores are calculated using a four-step approach that allows disentangling managerial inefficiency from unfavourable external conditions. Then, in a fifth stage, managerial efficiency scores are regressed over a set of explanatory variables, including CAP direct payments. Using individual farm data and meteorological data at the municipality level, we show that there is a non negligible component of inefficiency that is due to unfavourable conditions, and there is a strong significant negative relationship between managerial efficiency and CAP direct payments.

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  • Laure Latruffe & Hervé Guyomard & Chantal Le Mouël, 2009. "The role of public subsidies on farms’ managerial efficiency: An application of a five-stage approach to France," Working Papers SMART 09-05, INRAE UMR SMART.
    • Handle: RePEc:rae:wpaper:200905
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    2. Latruffe, Laure & Bravo-Ureta, Boris E. & Moreira, Victor H. & Desjeux, Yann & Dupraz, Pierre, 2011. "Productivity and Subsidies in European Union Countries: An Analysis for Dairy Farms Using Input Distance Frontiers," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114396, European Association of Agricultural Economists.
    3. Marian Rizov & Jan Pokrivcak & Pavel Ciaian, 2013. "CAP Subsidies and Productivity of the EU Farms," Journal of Agricultural Economics, Wiley Blackwell, vol. 64(3), pages 537-557, September.
    4. Elodie Douarin & Laure Latruffe, 2011. "Potential impact of the EU Single Area Payment on farm restructuring and efficiency in Lithuania," Post-Communist Economies, Taylor & Francis Journals, vol. 23(1), pages 87-103.
    5. Bieniek-Majka, Maryla & Guth, Marta, 2021. "Factor Productivity And Profitability Of Horticultural Holdings In Selected Countries Specializing In Fruit And Vegetable Production In The European Union In The Period 2008-2018," Roczniki (Annals), Polish Association of Agricultural Economists and Agribusiness - Stowarzyszenie Ekonomistow Rolnictwa e Agrobiznesu (SERiA), vol. 2021(2).
    6. Bakucs, Lajos Zoltan & Ferto, Imre & Latruffe, Laure & Desjeux, Yann & Soboh, Rafat & Dolman, Mark, 2011. "Comparative Analysis of Technical Efficiency in European Agriculture," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114235, European Association of Agricultural Economists.
    7. Wei Wang & Chongmei Zhang & Jiahao Song & Dingde Xu, 2021. "The Impact of Target Price Policy on Cotton Cultivation: Analysis of County-Level Panel Data from China," Agriculture, MDPI, vol. 11(10), pages 1-18, October.
    8. Bakucs, Lajos Zoltan & Ferto, Imre & Fogarasi, Jozsef & Latruffe, Laure & Desjeux, Yann & Matveev, Eduard & Marongiu, Sonia & Dolman, Mark & Soboh, Rafat, 2011. "EU farms’ technical efficiency and productivity change in 1990 – 2006," 85th Annual Conference, April 18-20, 2011, Warwick University, Coventry, UK 108773, Agricultural Economics Society.
    9. Narangerel Ganbold & Shah Fahad & Hua Li & Tumendemberel Gungaa, 2022. "An evaluation of subsidy policy impacts, transient and persistent technical efficiency: A case of Mongolia," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(7), pages 9223-9242, July.
    10. 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.
    11. Ciaian, Pavel & Rajcaniova, Miroslava & Guri, Fatmir & Zhllima, Edvin & Shahu, Edmira, 2018. "The impact of crop rotation and land fragmentation on farm productivity in Albania," Studies in Agricultural Economics, Research Institute for Agricultural Economics, vol. 120(3), December.
    12. Latruffe, Laure & Bravo-Ureta, Boris E. & Moreira, Victor H. & Desjeux, Yann & Dupraz, Pierre, 2012. "Productivity and Subsidies in the European Union: An Analysis for Dairy Farms Using Input Distance Frontiers," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126846, International Association of Agricultural Economists.
    13. Douarin, Elodie & Latruffe, Laure, 2009. "Will the EU Single Area Payment decrease farm efficiency in the New Member States?," 2009 Conference, August 16-22, 2009, Beijing, China 51625, International Association of Agricultural Economists.

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    technical efficiency; managerial efficiency; direct payments; farms; France;
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