THE EFFECTS OF CAP PAYMENTS ON FARM EFFICIENCY: AN EU CROSS-COUNTRY INVESTIGATION

This paper investigates the effects of the Common Agricultural Policy (CAP) payments in European countries (2005–2017). A two-stage Data Envelopment Analysis (DEA) is employed to measure economic efficiency and, following the Simar and Wilson (2007) procedure, in what measure direct payments have influenced firms’ performance. The findings reveal that the effect on economic efficiency is positive for all types of payments (i.e., total, coupled and decoupled). Notably, the findings showed a mixed effect of the stock of agricultural products on economic efficiency, which also may depend on socio-economic and geographical settings.