Levelling the playing field for European Union agriculture: Does the Common Agricultural Policy impact homogeneously on farm productivity and efficiency? |
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| Institution: | 1. Department of Economics, Universidad de Alcalá, Spain;2. Management Centre for the Evaluation and Monitoring of Social Programs, Secretariat of Social Development, Mexico;3. Aragonese Agency for Research and Development (ARAID), Unit of Agro-Food Economics and Natural Resources, Centre for Agro-Food Research and Technology (CITA), Zaragoza, Spain;4. University Loyola Andalusia, Department of Economics, Seville, Spain;1. University of Naples Federico II, Agricultural Economics and Policy Department, Via Università, 96-80055 Portici, NA, Italy;2. University of Messina, Dipartimento di Economia, Piazza Pugliatti, 1-98122 Messina, Italy;1. London School of Hygiene and Tropical Medicine, United Kingdom;2. Leverhulme Centre for Integrative Research on Agriculture and Health, United Kingdom;3. The Australian National University, Australia;1. Lithuanian Institute of Agrarian Economics, Vilnius, 03105, Lithuania;2. Mykolas Romeris University, Vilnius, 08303, Lithuania;3. Department of Economics and Management, University of Salento, 73100 Lecce, Italy;1. Financial Stability Division, Central Bank of Ireland, Spencer Dock, Dublin 1, Ireland;2. Teagasc Rural Economy and Development Programme, Athenry, Co. Galway, Ireland |
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| 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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| Keywords: | Productivity Technical efficiency convergence Environmental subsidies CAP EU |
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