The impact of the 1999 CAP reforms on the efficiency of the COP sector in Spain

Abstract

AbstractThe cereal, oilseeds, and protein crop sector (COP) occupies a prominent position within the European Union's agricultural sector. Within Spain, the COP sector accounts for almost a third of total Agricultural Guidance and Guarantee Fund expenses, and half of the utilized agricultural area (UAA). The COP sector is not only relevant because of its physical and economic magnitude, but also because of the political attention it receives. The Common Agricultural Policy (CAP) reforms that occurred during the 1990s paid special attention to this sector. This article aims to determine the impacts of Agenda 2000 on a sample of Spanish COP farmers’ production decisions by using an output‐oriented stochastic distance function. The distance function allows for an assessment of the reform‐motivated changes on total output, input used, input composition, and crop mix. It also permits an assessment of the impacts of the reform on farms’ technical efficiency.Results show that the reform has shifted the production frontier inward and changed output composition in favor of voluntary set‐aside land. With respect to input composition, Agenda 2000 induced a decrease in land, fertilizers, pesticides, and other inputs in favor of labor. In addition, Agenda 2000 has had a negative impact on technical efficiency.