Effect of public subsidies on farm technical efficiency: a meta-analysis of empirical results

Abstract

Investigating the impact of public subsidies on farm technical efficiency is becoming a critical issue in applied agricultural policy analysis. This article presents a meta-analysis of empirical results on this issue, based on data gathered from a systematic literature review. We find that, in the empirical literature, subsidies are commonly negatively associated with farm technical efficiency. Meta-regression estimation results show that the direction (significantly negative, significantly positive or non-significant) of the observed effects is sensitive to the way subsidies are modelled in the empirical studies.

Subsidies and agricultural productivity in the EU

“…First, the CATS data include details on all 17 Other studies relating agricultural productivity (efficiency) to this subsidy rate are, for example, Fogarasi and Latruffe (2009) and Bakucs, Latruffe, Fertő, and Fogarasi (2010). See Minviel and Latruffe (2017) for an overview. 18 The CATS was created to assist the European Commission in implementing audits on agricultural expenditures.…”

“…Subsidies may enhance agricultural productivity in the presence of imperfections in credit or insurance markets (e.g., Ciaian & Swinnen, 2009;Hennessy, 1998;Roche & McQuinn, 2004). A recent review concludes that some studies find positive, other negative effects, and some find no effect of subsidies on agricultural productivity (Minviel & Latruffe, 2017). These different findings may be due to variations in rural market imperfections or to differences in the nature of the subsidies.…”

“…Other studies relating agricultural productivity (efficiency) to this subsidy rate are, for example, Fogarasi and Latruffe () and Bakucs, Latruffe, Fertő, and Fogarasi (). See Minviel and Latruffe () for an overview.…”

Efficient Use of Energy Resources on French Farms: An Analysis through Technical Efficiency

“…This indicates that highly subsidized farms have an inefficient behavior in the sense that they use energy resources more in excess than farms that are low subsidized. The literature on the effect of subsidies on farms' technical efficiency is relatively vast, e.g., see Zhu et al [42] and a recent meta-analysis by Minviel and Latruffe [43]. Existing studies generally find that subsidies negatively impact farms' technical efficiency.…”

Measuring dynamic biased technical change in Lithuanian cereal farms

“…Support schemes prevail in agriculture across many countries—for example, the common agricultural policy (CAP) in the European Union (EU)—because of the multifunctionality of agriculture. Among multiple support measures, those related to investments are linked to changes in capital assets and modernization in general (Minviel & Latruffe, ). Thus, it is important to identify the effects of support policies on the underlying technology.…”