1. CARERA The Impact of CAP Reform on the Employment Levels in Rural Areas Xueqin Zhu & Alfons Oude Lansink Business Economics, Wageningen University (8 June 2007, Uppsala) D12 An Assessment of the Impact of CAP Reform on the Competitiveness of the Farming Sector (Field cropping)

2. Overview Frontier model (Output distance function) and inefficiency effect model Input and output variables Field cropping in four countries (GE,GR,NL & SW) Input and output prices Explanatory variables (z) of the efficiency effects model Frontier function & technical efficiency estimates Present activities and future plan

3. Output distance function and inefficiency effects model Translog Inefficiency effects model Technical efficiency

4. Outputs and inputs specification 4 Outputs  Cereals  Root crops (aggregated by potatoes and sugar beets)  Other crops (10 remaining crops in FADN data)  Other products (livestock products and other output) 6 Inputs  3 variable inputs Seeds Chemicals (aggregated by fertilisers and pesticides) Other variable inputs (other specific inputs & farm overheads)  Three factors (labour, land and capital)

5. Composition of field crop outputs(%) GermanyGreeceNetherlandsSweden Cereals 2520825 Root crops 22116035 Other crops 14661911 Other output 3931329 Total 100

6. Composition of variable inputs (%) GermanyGreeceNetherlandsSweden Seeds 9132310 Chemicals 21322421 Other 70555369 Total 100

7. Tornqivist price indexes for outputs and inputs  Root crops aggregated by 2 EUROSTAT price indexes  Other crops aggregated by 7 EUROSTAT price indexes  Other output by 2 EUROSTAT price indexes  Chemicals (input) by 2 EUROSTAT price indexes  Other variable inputs by 3 EUROSTAT price indexes

8. Price index of root crops 1995199619971998199920002001200220032004 GE 145105106126116100116110126107 GR 117120121949310096788489 NL 219136137213197100138139136129 SW 130116101110132100117109108115

9. Price index of other crops 1995199619971998199920002001200220032004 GE 109 11111393100111110116110 GR 12011811210397100899910999 NL 94981041031021009994 89 SW 10611011111393100106105103

10. Explanatory variables in inefficiency effects model- exogenous factors z1 (composition of subsidy): coupled (crop) subsidy/ total subsidy z2 (composition of revenue): total subsidy/total revenue z3: farm taxes z4:farm size z5 (crop specialization): crop output/total output z6 (family labour): unpaid labour/total labour z7 (ownership of land): rented land/total land z8 (long term debt):long term loans/total assets z9 (short term debt): short term loans/total assets

11. Explanatory variables in inefficiency effects model- regional Dummy’s 13 regions for Germany Schleswig-Holstein, Niedersachsen,Nordrhein-Westfalen, Hessen, Rheinland-Pfalz, Baden-Württemberg, Bayern,Saarland, Brandenburg, Mecklenburg- Vorpommen,Sachsen, Sachsen-Anhalt, Thueringen 4 regions for Greece Makedonia-Thraki, Ipiros-Pelponissos-Nissi Loniou, Thessalia, Sterea Ellas-Nissi Egeaou-Kriti 3 regions for Sweden Slattbygdslan, Skogs-och mellanbygdslan, Lan i norra

12. Mean technical efficiency 1995-2004 Germany:0.64 Greece: 0.52 Netherlands:0.75 Sweden: 0.69

13. Technical efficiency over time 1995199619971998199920002001200220032004 GE 0.590.65 0.610.640.690.680.670.600.61 GR 0.630.580.570.390.420.470.520.530.590.58 NL 0.730.75 0.740.750.760.750.77 0.78 SW 0.640.770.740.680.660.650.730.690.660.69

14. Regional technical efficiency Germany 12345678910111213 TE 0.660.650.630.620.630.670.640.670.650.610.670.600.62 Fre.108150178144230936278431456619318887

15. Regional technical efficiency Greece Makedonia- Thraki Ipiros- Pelponissos -Nissi Loniou Thessalia Sterea Ellas-Nissi Egeaou- Kriti Total TE0.510.600.540.500.52 Freq.86163462725140813095

16. Regional technical efficiency Sweden RegionsSlattby gdslan Skogs-och mellanbyg dslan Lan i norra Total TE0.690.670.740.69 Freq.6467920745

17. Impacts of z variables on TE GEGRNLSW Z1 Crop subsidy -0.34*-0.12*-0.65-0.68* Z2 Total subsidy 0.21*0.15* 0.27* Z3 Taxes -0.89*0.38*-0.16*0.50* Z4 Farm size -0.70*-0.150.12*-0.44* Z5 Crop specialization 0.25*-0.94*0.13*0.11* Z6 Family labour -0.150.190.170.70 Z7 Ownership land 0.45**-0.23**-0.13*-0.28* Z8 Long run debt 0.290.18*0.17-0.16** z9 Short run debt 0.15*0.17*0.290.22

18. Present activites Efficiency and productivity analysis:  Calculation of production elasticity's of inputs  Productivity analysis and decomposition into technical change, technical efficiency change, allocative efficiency change and scale effects Workpackage 6:  Farmers’ survey  Non-farmer stakeholders’ survey

19. Future plan Interpretation of the results, especially the impact of subsidy’s on technical efficiency, and the regional differences, with cooperation with partners Request to the partners:  Comments on the selection of inputs and outputs  The regional information (Local, national subsidy’s, infrastructural conditions, market access etc.) which can explain the efficiency Cost efficiency of the crop sector Further study on the dairy sector