Estimation of the impact of CAP subsidies as environmental variables on Romanian farms
Titolo Rivista: Economia agro-alimentare 
Autori/Curatori: Nicola Galluzzo 
Anno di pubblicazione:  2021 Fascicolo: 3 Current use and new perspectives for the Farm Accountancy Data Network Lingua: Inglese 
Numero pagine:  0 P. 1-24 Dimensione file:  0 KB
DOI:  10.3280/ecag2021oa12772
Il DOI è il codice a barre della proprietà intellettuale: per saperne di più:  clicca qui   qui 


Articolo Open Access
Clicca qui per vederlo.

Romanian agriculture is characterised by the presence of small farm enterprises, with an average value of land capital of less than 5 hectares in more than 95% of cases. The aim of this research was to assess the level of technical efficiency in farming through a non-parametric approach such as the Data Envelopment Analysis (DEA), and also to estimate the impact that financial subsidies allocated under the first and second pillars of the Common Agricultural Policy (CAP) have had on the technical efficiency. In the application of this analysis, these two inputs have been considered as environmental variables in order to evaluate their effect in fostering the technical efficiency using a two-stage dea method. The results have revealed the pivotal impact of financial subsidies disbursed through the first and second pillars of cap in enhancing technical efficiency in the Romanian farms included in the fadn dataset. In contrast, the subsidies disbursed under only the second pillar of the CAP in the framework of rural development have not been found to have had any discernible effect on the technical efficiency of Romanian farms. The novelty of this quantitative approach in the estimation of technical efficiency lies in its focus on the role of environmental variables as drivers in affecting the technical efficiency of farms, defining, in addition, how important they are in addressing efficiency and in shifting enhancing the function of technical efficiency on farms as well.Some conclusions were drawn: it is important to increase the endowment of subsidies for rural development and as well as decoupled payments in order to raise the level of technical efficiency in Romanian farms. At the same time, the findings suggest the need for Romanian farmers to reduce the level of certain inputs, such as labour, on the one hand, while on the other, increasing the dimension size of farms in terms of land capital and encouraging greater investment in labor-saving technology, even if significant imbalances remain between different Romanian regions, both in terms of the level of technical efficiency achieved and also in terms of output yield, and in the endowment of land capital and other assets.

Keywords:  Data Envelopment Analysis; Technical efficiency; Separability test; Rural Development Programme; FADN

  1. Baráth, L., Fertő, I. & Bojnec, Š. (2018). Are farms in less favored areas less efficient? Agricultural Economics, 49(1), 3-12, , DOI: 10.1111/agec.12391.
  2. Farrell M.J. (1957). The measurement of productive efficiency. Journal of the Royal Statistical Society: Series A (General), 120(3), 253-281, , DOI: 10.2307/2343100.
  3. Aigner, D., Lovell, C.K. & Schmidt, P. (1977). Formulation and estimation of stochastic frontier production function models. Journal of econometrics, 6(1), 21-37, , DOI: 10.1016/0304-4076(77)90052-5.
  4. Ayouba, K., Boussemart, J.P. & Vigeant, S. (2017). The impact of single farm payments on technical inefficiency of French crop farms. Review of Agricultural, Food and Environmental Studies, 98(1), 1-23, , DOI: 10.1007/s41130-017-0049-2.
  5. Bădin, L., Daraio, C. & Simar, L. (2010). Optimal bandwidth selection for conditional efficiency measures: A data-driven approach. European journal of operational research, 201(2), 633-640, , DOI: 10.1016/j.ejor.2009.03.038.
  6. Bădin, L., Daraio, C. & Simar, L. (2012). How to measure the impact of environmental factors in a nonparametric production model. European Journal of Operational Research, 223(3), 818-833, , DOI: 10.1016/j.ejor.2012.06.028.
  7. Banker, R.D., Charnes, A. & Cooper, W.W. (1984). Some models for estimating technical and scale inefficiencies in data envelopment analysis. Management science, 30(9), 1078-1092, , DOI: 10.1287/mnsc.30.9.1078.
  8. Baráth, L., Fertő, I. & Bojnec, Š. (2020). The effect of investment, LFA and agrienvironmental subsidies on the components of total factor productivity: the case of Slovenian farms. Journal of Agricultural Economics, 71(3), 853-876, , DOI: 10.1111/1477-9552.12374.
  9. Bartolini, F. & Viaggi, D. (2013). The common agricultural policy and the determinants of changes in EU farm size. Land use policy, 31, 126-135, , DOI: 10.1016/j.landusepol.2011.10.007.
  10. Battese, G.E. & Coelli, T.J. (1992). Frontier production functions, technical efficiency and panel data: with application to paddy farmers in India. Journal of productivity analysis, 3(1-2), 153-169, , DOI: 10.1007/978-94-017-1923-0_10.
  11. Battese, G.E. & Coelli, T.J. (1995). A model for technical inefficiency effects in a stochastic frontier production function for panel data. Empirical economics, 20(2), 325-332, , DOI: 10.1007/BF01205442.
  12. Beluhova-Uzunova, R., Atanasov, D. & Hristov, K. (2017). Analysis of direct payments distribution in Bulgarian agriculture. Trakia Journal of Sciences, 15(1), 282-287.
  13. Bielik, P. & Rajčániová, M. (2004). Competitiveness analysis of agricultural enterprises in Slovakia. Agricultural Economics, 50(12), 556-560, , DOI: 10.17221/5248-AGRICECON.
  14. Bravo-Ureta, B.E. & Pinheiro, A.E. (1993). Efficiency analysis of developing country agriculture: a review of the frontier function literature. Agricultural and resource economics Review, 22(1), 88-101, , DOI: 10.1017/S1068280500000320.
  15. Charnes, A., Cooper, W.W. & Rhodes, E. (1978). Measuring the efficiency of decision making units. European Journal of Operational Research, 2, 429-444, , DOI: 10.1016/0377-2217(79)90229-7.
  16. Ciaian, P. & Swinnen, J.F. (2006). Land market imperfections and agricultural policy impacts in the new EU member states: a partial equilibrium analysis. American Journal of Agricultural Economics, 88(4), 799-815, , DOI: 10.1111/j.1467-8276.2006.00899.x.
  17. Ciaian, P., Kancs, D.A. & Swinnen, J. (2014). The impact of the 2013 reform of the common agricultural policy on land capitalization in the European Union. Applied Economic Perspectives and Policy, 36(4), 643-673, , DOI: 10.1093/aepp/ppu016.
  18. Coelli, T.J., Rao, D.S.P., O’Donnell, C.J. & Battese, G.E. (2005). An introduction to efficiency and productivity analysis. Berlin, DE: Springer Verlag, , DOI: 10.1007/978-1-4615-5493-6.
  19. Cooper, W.W., Seiford, L.M., Tone, K. & Zhu, J. (2007). Some models and measures for evaluating performances with DEA: past accomplishments and future prospects. Journal of Productivity Analysis, 28(3), 151-163, , DOI: 10.1007/s11123-007-0056-4.
  20. Crescenzi, R. & Rodríguez-Pose, A. (2011). Reconciling top-down and bottom-up development policies. Environment and planning A, 43(4), 773-780, , DOI: 10.1068/a43492.
  21. Czyzewski, A., Majchrzak, A. & Smedzik-Ambrozy, K. (2017). Land Productivity and Its Prices in the Countries of EU-15 and EU-12. Economic Science for Rural Development, 46, 228-228.
  22. Daraio, C. & Simar, L. (2005). Introducing environmental variables in nonparametric frontier models: a probabilistic approach. Journal of productivity analysis, 24(1), 93-121, , DOI: 10.1007/s11123-005-3042-8.
  23. Daraio, C., Simar, L. & Wilson, P.W. (2015). Testing the “separability” condition in two-stage nonparametric models of production (No. 2015/21). LEM working paper series.
  24. Daraio, C., Simar, L. & Wilson, P.W. (2018). Central limit theorems for conditional efficiency measures and tests of the ‘separability’ condition in non-parametric, two-stage models of production. The Econometrics Journal, 21(2), 170-191, , DOI: 10.1111/ectj.12103.
  25. Forleo, M.B., Giaccio, V., Mastronardi, L. & Romagnoli, L. (2021). Analysing the efficiency of diversified farms: Evidences from Italian FADN data. Journal of Rural Studies, 82, 262-270, , DOI: 10.1016/j.jrurstud.2021.01.009.
  26. Galluzzo, N. (2013). Farm dimension and efficiency in Italian agriculture: a quantitative approach. American Journal of Rural development, 1(2), 26-32.
  27. Galluzzo, N. (2016). An analysis of the efficiency in a sample of small Italian farms part of the fadn dataset. Agricultural Economics, 62(2), 62-70, , DOI: 10.17221/37/2015-AGRICECON.
  28. Galluzzo, N. (2018). A quantitative assessment of the rurality and an efficiency analysis of emigration in Romania. Applied Studies in Agribusiness and Commerce, 12(3-4), 39-46, , DOI: 10.19041/APSTRA CT/2018/3-4/5.
  29. Galluzzo, N. (2019a). A long-term analysis of the Common Agricultural Policy financial subsidies towards Italian farms. Ukranian Journal on Veterinary and Agricultural Science, 2(1), 12-17, , DOI: 10.32718/ujvas2-1.03.
  30. Galluzzo, N. (2019b). An analysis of technical efficiency in Icelandic dairy and sheep farms. Studies in Agricultural Economics, 121(3), 144-150, , DOI: 10.7896/j.1916.
  31. Galluzzo, N. (2020a). A technical efficiency analysis of financial subsidies allocated by the CAP in Romanian farms using Stochastic Frontier Analysis. European Countryside, 12(4), 494-505, , DOI: 10.2478/euco-2020-0026.
  32. Galluzzo, N. (2020b). Analysis of resilience in Romanian rural farm areas by a quantitative approach. Bulgarian Journal of Agricultural Science, 26(1), 16-22.
  33. Galluzzo, N. (2020c). Effects of farms specialization, environmental subsidies and agri-districts on technical efficiency in Italian farms. Ikonomika I upravlenie na selskoto stopanstvo, 65(4), 13-22.
  34. Galluzzo, N. (2021). A quantitative analysis on Romanian rural areas, agritourism and the impacts of European Union’s financial subsidies. Journal of Rural Studies, 82, 458-467, , DOI: 10.1016/j.jrurstud.2021.01.025.
  35. Garrone, M., Emmers, D., Lee, H., Olper, A. & Swinnen, J. (2019). Subsidies and agricultural productivity in the EU. Agricultural Economics, 50(6), 803-817, , DOI: 10.1111/agec.12526.
  36. Gorton, M. & Davidova, S. (2004). Farm productivity and efficiency in the CEE applicant countries: a synthesis of results. Agricultural economics, 30(1), 1-16, , DOI: 10.1111/j.1574-0862.2004.tb00172.x.
  37. Gutiérrez, E. & Lozano, S. (2020). Cross-country comparison of the efficiency of the European forest sector and second stage DEA approach. Annals of Operations Research, 1-26, , DOI: 10.1007/s10479-020-03756-9.
  38. Gutiérrez, E., Aguilera, E., Lozano, S. & Guzmán, G.I. (2017). A two-stage DEA approach for quantifying and analysing the inefficiency of conventional and organic rain-fed cereals in Spain. Journal of cleaner production, 149, 335-348, , DOI: 10.1016/j.jclepro.2017.02.104.
  39. Horvat, A.M., Radovanov, B., Popescu, G.H. & Panaitescu, C. (2019). A twostage DEA model to evaluate agricultural efficiency in case of Serbian districts. Економика пољопривреде, 66(4), 965-973, , DOI: 10.5937/ekoPolj1904965M.
  40. Kourtesi, S., Fousekis, P. & Polymeros, A. (2012). Conditional efficiency estimation with environmental variables: evidence from Greek cereal farms. Scientific Bulletin-Economic Sciences, 11(1), 43-52.
  41. Kumbhakar, S.C. & Lien, G. (2010). Impact of Subsidies on Farm Productivity and Efficiency. In Ball, V., Fanfani, R. & Gutierrez, L. (Eds.). The Economic Impact of Public Support to Agriculture. Studies in Productivity and Efficiency, 7. New York, NY: Springer, , DOI: 10.1007/978-1-4419-6385-7_6.
  42. Kumbhakar, S.C., Wang, H.J. & Horncastle, A.P. (2015). A practitioner’s guide to stochastic frontier analysis using Stata. Cambridge, UK: Cambridge University Press, , DOI: 10.1017/CBO9781139342070.
  43. Latruffe, L. & Desjeux, Y. (2016). Common Agricultural Policy support, technical efficiency and productivity change in French agriculture. Review of Agricultural, Food and Environmental Studies, 97(1), 15-28, , DOI: 10.1007/s41130-016-0007-4.
  44. Latruffe, L., Bravo-Ureta, B.E., Carpentier, A., Desjeux, Y. & Moreira, V.H. (2017). Subsidies and technical efficiency in agriculture: Evidence from European dairy farms. American Journal of Agricultural Economics, 99(3), 783-799, , DOI: 10.1093/ajae/aaw077.
  45. Latruffe, L., Diazabakana, A., Bockstaller, C., Desjeux, Y., Finn, J., Kelly, E., Ryan, M. & Uthes, S. (2016). Measurement of sustainability in agriculture: a review of indicators. Studies in Agricultural Economics, 118(3), 123-130, , DOI: 10.7896/j.1624.
  46. Laurinavičius, E. & Rimkuvienė, D. (2017). The comparative efficiency analysis of EU members agriculture sectors. Rural Sustainability Research, 37(332), 10-19, , DOI: 10.1515/plua-2017-0002.
  47. Lovell, C.K. (1993). Production frontiers and productive efficiency. The measurement of productive efficiency: Techniques and applications, 3, 67.
  48. Manevska-Tasevska, G., Rabinowicz, E. & Surry, Y. (2016). Pure and compensated efficiency of Swedish dairy farms. Agricultural and Food Science, 25(2), 111-123, , DOI: 10.23986/afsci.53182.
  49. Mennig, P. & Sauer, J. (2019). The impact of agri-environment schemes on farm productivity: a DID-matching approach. European Review of Agricultural Economics, 1-49, , DOI: 10.1093/erae/jbz006.
  50. Minviel, J.J. & Latruffe, L. (2017). Effect of public subsidies on farm technical efficiency: a meta-analysis of empirical results. Applied Economics, 49(2), 213-226, , DOI: 10.1080/00036846.2016.1194963.
  51. Nowak, A., Kijek, T. & Domańska, K. (2015). Technical efficiency and its determinants in the European Union. Agricultural Economics, 61(6), 275-283, , DOI: 10.17221/200/2014-AGRICECON.
  52. Osman, I.H. & Anouze, A.L. (2014). A cognitive analytics management framework (CAM-Part 3): Critical skills shortage, higher education trends, education value chain framework, government strategy. In Osman, I.H., Anouze, A.L. & Emrouznejad, A. (Eds.). Handbook of research on strategic performance management and measurement using data envelopment analysis (pp. 190-234). Hershey, US: igi Global.
  53. Petrick, M. & Zier, P. (2011). Regional employment impacts of Common Agricultural Policy measures in Eastern Germany: a difference‐in‐differences approach. Agricultural Economics, 42(2), 183-193, , DOI: 10.1111/j.1574-0862.2010.00509.x.
  54. Rizov, M., Pokrivcak, J. & Ciaian, P. (2013). CAP subsidies and productivity of the EU farms. Journal of Agricultural Economics, 64(3), 537-557, , DOI: 10.1111/1477-9552.12030.
  55. Rude, J. (2008). Production effects of the European Union’s single farm payment. Canadian. Journal of Agricultural Economics/Revue Canadienne d’Agroeconomie, 56(4), 457-471, , DOI: 10.1111/j.1744-7976.2008.00141.x.
  56. Rudinskaya, T., Hlavsa, T. & Hruska, M. (2019). Estimation of technical efficiency of Czech farms operating in less favoured areas. Agricultural Economics, 65(10), 445-453, , DOI: 10.17221/52/2019-AGRICECON.
  57. Shucksmith, M., Thomson, K.J. & Roberts, D. (2005). The CAP and the regions: the territorial impact of the Common Agricultural Policy. Wallingford: CAB Int. Publishing, , DOI: 10.1079/9780851990552.0000.
  58. Simar, L. & Wilson, P.W. (2007). Estimation and inference in two-stage, semiparametric models of production processes. Journal of econometrics, 136(1), 31-64, , DOI: 10.1016/j.jeconom.2005.07.009.
  59. Simar, L. & Wilson, P.W. (2011). Two-stage DEA: caveat emptor. Journal of Productivity Analysis, 36(2), 205-218, , DOI: 10.1007/s11123-011-0230-6.
  60. Simar, L. & Wilson, P.W. (2015). Statistical approaches for non‐parametric frontier models: a guided tour. International Statistical Review, 83(1), 77-110, , DOI: 10.1111/insr.12056.
  61. Stanciu, S. (2017). A comparative study regarding the European agricultural allocation of funds for rural development during 2007-2013 and 2014-2020. SEA–Practical Application of Science, 13, 49-55.
  62. Swinbank, A. (2008). Potential wto Challenges to the CAP. Canadian Journal of Agricultural Economics/Revue Canadienne d’Agroeconomie, 56(4), 445-456, , DOI: 10.1111/j.1744-7976.2008.00140.x.
  63. Todorović, S., Papić, R., Ciaian, P. & Bogdanov, N. (2020). Technical efficiency of arable farms in Serbia: do subsidies matter? New Medit: Mediterranean Journal of Economics, Agriculture and Environmen, 19(4), 81-97, , DOI: 10.30682/nm2004f.
  64. Von Witzke, H. & Noleppa, S. (2007). Agricultural and trade policy reform and inequality: the distribution effects of the direct payments to German farmers under the EU’s new common agricultural policy. Working paper no. 79/2007.
  65. Wang, H.J. & Schmidt, P. (2002). One-step and two-step estimation of the effects of exogenous variables on technical efficiency levels. Journal of Productivity Analysis, 18(2), 129-144, , DOI: 10.1023/A:1016565719882.
  66. Zhu, X. & Lansink, A.O. (2010). Impact of CAP subsidies on technical efficiency of crop farms in Germany, the Netherlands and Sweden. Journal of Agricultural Economics, 61(3), 545-564, , DOI: 10.1111/j.1477-9552.2010.00254.x.

Nicola Galluzzo, in "Economia agro-alimentare" 3/2021, pp. 1-24, DOI:10.3280/ecag2021oa12772


FrancoAngeli è membro della Publishers International Linking Association associazione indipendente e no profit per facilitare l'accesso degli studiosi ai contenuti digitali nelle pubblicazioni professionali e scientifiche