The effect of agricultural subsidies on efficiency and productivity of farms

Research area and keywords of research:
The effect of agricultural subsidies on efficiency and productivity of farms

Name of the researcher(s) and research group:

• Dr. Zsuzsanna Nagy

Name of the Institute:
University of Nyíregyháza, Institute of Business and Management Sciences

Research objectives:

1. We model production with a random parameter stochastic production frontier model, which allow us to consider technological differences among farms. Based on the estimated parameter of the model we construct Törnquist-Theil TFP index. We compare TE and TFP between the analysed groups using statistical tests, then in order to account for selection bias we use matching method to compare these performance indicators.
2. The agri-environmental schemes (AESs) of the European Union employ the highest share of the public budget allocated to rural development programs. The literature on AESs is quite extensive, however most of it tries to analyse the factors affecting farmers’ participation in agri-environmental schemes. In contrast, only a few studies so far have attempted to empirically measure the actual impact of being subject to AESs on farms’ applied technology and performance.

Description and results of research:

1. The aim of this paper is to compare technical efficiency (TE) and total fector productivity (TFP) of Hungarian organic and conventional Cereals, Oilseed and Protein (COP) crop producing farms. Results show that TE and TFP scores of organic farms smaller com-pared to conventional farms, but the difference is statistically not significant.
2. The expectation is that farmers are heavily affected by participation in AESs, which may lead to a deep reorganization of the farm. More precisely, we investigate two research questions. First, we model production applying a random parameter model and investigate how does participation in AES change technological parameters of farms. Second, we compare participating and non-participating farms’ technical efficiency. We apply FADN Data of Hungarian Fieldcrop farms. Preliminary results suggest that participation in AES has higher impact on applied technology and less remarkable on technical efficiency differences.

Research partners from other institutions:-

Other information:-

Publications (max. 5):

1. BARATH, Lajos; BAKUCS, Zoltán Lajos; NAGY, Zsuzsanna; FERTŐ, Imre: DIFFERENCES IN EFFICIENCY AND PRODUCTIVITY BETWEEN CONVENTIONAL AND ORGANIC FARMS: THE CASE OF HUNGARIAN CEREAL OILSEED AND PROTEIN (COP) CROP PRODUCING FARMS (2010-2015)
   13th International Conference of J. Selye University. Economics Section. Conference Proceedings
   Komárno, Szlovákia : J. Selye University, Komárno, Slovakia (2022) 412 p. pp. 31-39. , 9 p.
2. Zsuzsanna, Nagy; Lajos, Baráth: An examination of the Effect of Participation in Agri-Environmental Schemes (AES) on farms’ applied technology and technical efficiency: online konferencia előadás (2021)
   ICEBM 5th International Conference on Economics and Business Management Cluj-Napoca, Romania, 2021. november 12.