Lajos Baráth

Productivity and convergence in European agriculture

In the paper we investigate relative productivity levels and decompose productivity change for European agriculture between 2004 and 2013. More specifically (1) we contribute to the debate whether agricultural Total Factor Productivity (TFP) has declined or not in the European Union (EU); (2) we compare the relative TFP level across EU member states and investigate the difference between ‘old’ member states (OMS, i.e. the EU-15) and ‘new’ member states (NMS) and (3) we test whether TFP is converging or not among member states. The empirical analysis applies the aggregate quantity framework developed in O’Donnell (2008), using country level panel data from the Economic Accounts for Agriculture for 23 EU member states. The results imply that TFP has slightly decreased in the EU over the analysed period; however there are significant differences in this respect between the OMS and NMS and across member states. Finally, our estimations support the productivity convergence hypothesis across the member sates.

Demand for Farm Insurance Under Financial Constraints

This article investigates the effect of the use of crop insurance on farms’ economic performance. The authors hypothesize the existence of reciprocal causation between crop insurance use and the economic performance of farms in an environment characterized by imperfect financial markets and farm budget constraints. The results confirm the reciprocal causation hypothesis. Economic performance is found to positively influence farms’ demand for insurance, confirming the significance of budget constraints. Moreover, insurance is found to have a negative effect on Hungarian farms’ economic performance, implying that the crop insurance system is inefficient.