One or many European models of agriculture? How heterogeneity influences income creation among farms in the European Union

Abstract

Agricultural structures are quite heterogeneous across the European Union (EU), and it is likely that the underlying technology also differs across regions. In this article, we claim that the heterogeneity of agriculture across the EU affects the process of income creation (i.e. the relative importance of the factors of farm income differ for different agricultural models). A panel of farms representative for 125 regions reporting to the EU Farm Accountancy Data Network (FADN) during the period from 2007 to 2018 is used. In this article, those regions are grouped into three clusters. A system generalised method of moments (GMM) panel estimator is applied to each cluster. The results showed that total factor productivity (TFP), relative prices and agricultural subsidies make different contributions to farm net value added (FNVA). In particular, the income growth of farms in regions dominated by large farms seems to react more to marginal changes of the explanatory variables.

A “Teal” Deal for European agriculture

“…Given the heterogeneity of EU's Member States (GNP, infrastructure, agricultural productivity, rate of new technologies integration etc.) (Auray and Eyquem, 2021;Reimer et al, 2023;Triantafyllidis et al, 2023;Petrović et al, 2024), the heterogeneity of agricultural structures across the Union (Kryszak and Herzfeld, 2021), and the farmers' heterogeneous attitudes towards sustainability related policies (Niskanen et al, 2021) the Commission should provide a wide range of alternatives that lead to that desired outcome. In an effort to address the farmers protests across the EU and de-escalate the rising tension, von der Leyen announced in 2024 the withdrawal of the Sustainable Use Regulation (Euronews, 2024b).…”

The Impact of Subsidies on Persistent and Transient Technical Inefficiency: Evidence from Polish Dairy Farms

“…In particular, we first investigate the homoscedastic SFA model (M1) and compare it with the heteroscedastic model (M2) proposed by Caudill, Ford, and Gropper (1995), which allows for the study the efficiency drivers. Subsequently, since the heterogeneity of farms in the European Union is often underlined in the literature (Kryszak and Herzfeld, 2021), we consider the models which account for the unobserved heterogeneity, that is the homoscedastic True Random Effects (TRE) model ( M3) and the heteroscedastic one (M4). Finally, we consider the model which accounts for both unobserved heterogeneity and persistent inefficiency, that is the homoscedastic GTRE model (M5) and its heteroscedastic version (M6).…”