Assessing the Impacts of Pillar 1 and 2 Subsidies on TFP in French Crop Farms


  • Sébastien Mary

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    •  European Commission – Joint Research Centre, Institute for Prospective Technological Studies, Inca Garcilaso 3, Edificio Expo, 41092 Seville, Spain and University of Aberdeen Business School, Department of Economics, Edward Wright Building, Aberdeen AB24 3QY, UK. E-mail: for correspondence. The provision of the EU-FADN data used in this article by DG-AGRI G-3 as part of the WEMAC project funded by the EU Commission (Contract No. SSPE-CT-2005-006611) is gratefully acknowledged. The author thanks David Harvey and two anonymous referees for comments and Euan Phimister for suggestions on an earlier draft of this article. The views expressed are purely those of the author and may not in any circumstances be regarded as stating an official position of the European Commission or the University of Aberdeen.


This article analyses the impact of common agricultural policy (CAP) subsidies on total factor productivity using a FADN dataset of French crop farms between 1996 and 2003. We first estimate a production function using a system GMM approach and then recover farm-level total factor productivity (TFP). Further, the impact of Pillar 1 and 2 subsidies on TFP is investigated and results show that several subsidies have a negative impact on productivity during the period covered in the dataset. CAP reforms have also had an impact on the relationship between subsidies and productivity.