We investigate relative productivity levels and decompose productivity change for European agriculture between 2004 and 2013. Specifically (i) we contribute to the debate on whether agricultural Total Factor Productivity (TFP) has declined or not in the European Union (EU); (ii) we compare the relative TFP level across EU Member States and investigate the difference between ‘old’ Member States (OMS, i.e. the EU‐15) and ‘new’ Member States (NMS); and (iii) we test whether TFP is converging or not among Member States. The empirical analysis applies an aggregate quantity framework to country‐level panel data from the Economic Accounts for Agriculture for 23 EU Member States. The results imply that TFP has slightly decreased in the EU over the analysed period; however there are significant differences between the OMS and NMS and across Member States. Finally, our estimates suggest that productivity is generally converging over this period, albeit slowly.

In this paper, we analyse the technical efficiency (TE) of Hungarian crop farms between 2001 and 2009 using conventional stochastic frontier analysis (SFA) and a latent class model (LCM). Our results suggest that technological heterogeneity plays an important role in Hungarian cereal, oilseed and protein (COP) crop producing farms, which are traditionally assumed to use homogeneous technologies. We identify two groups with different technologies using an LCM, and find that the scale of land use is one of the most important factors that differentiates our sample into unique technologies. Our results reveal that in the Hungarian COP sector there is less chance to increase performance through TE improvement than was earlier expected. The estimations also suggest that there is no room to improve productivity by increasing farm size, unless farms switch technologies. Consequently, agricultural policies for increasing productivity should concentrate on technological progress.

The effect of subsidies on the performance of farms has received a great deal of attention in the literature, although results are inconclusive. Furthermore, much of the related literature examines the effect of subsidies only on technical efficiency (TE). We examine the effect of different types of subsidies on the different components of total factor productivity (TFP) in Slovenian agriculture over the period 2006-2013. We first estimate a Random Parameter Stochastic production frontier model. Then, based on the estimates of this model, we calculate and decompose the TFP index into TE, scale efficiency and technological change. Third, we apply combined difference-indifference and a matching estimator to examine the effect of investment, less favoured area (LFA) and agri-environmental (AE) subsidies on the different components of TFP. In our case, these subsidies are found to have no significant effect on either TFP or on its components.