Analyzing The Effects of Livestock Policies on Farm-level Efficiency in Turkey; Thrace Region Case

Abstract

The effect of agricultural subsidies on the efficiency of farms is one of the main issues discussed today. Dairy farming benefits from various types of subsidies and take a lion share from the agricultural support budget. In this context, this study has four important aims. Firstly, to analyze the technical efficiency of dairy farms, secondly, to investigate the effects of policy tools on efficiency, thirdly to determine factors affecting efficiencies and finally to bring proposals. This study was carried out in Thrace Region of Turkey and interviewed with 140 dairy farmers. The three-stage method was applied in this study. The technical efficiency and policies effects on efficiency were determined by using Data Envelopment Analysis. Tobit Analysis was used to investigate the relationship between efficiency and farmer or farms-oriented characteristics. The results of Data Envelopment Analysis show that average efficiency scores are 0.700 under constant return to scale, 0.795 under variable return to scale and 0.886 for scale efficiency. The technical efficiency increases by 1.13%-2.43% thanks to subsidies and the scale efficiency is 1.35% higher. It is noteworthy that subsidies affect efficiency positively but provide a small improvement, also the effects vary across the farm-scale groups. According to Tobit Analysis, the education level of farmers, the share of livestock in total income, family size and whether tend to give up farming are significantly affecting efficiency. It is recommended for governments should provide subsidies to increase the scale of small farms that work with increasing return to scale and to improve the technology of larger farms that work with decreasing return to scale.