Subsidies and Technical Efficiency of Large-Scale Farms in Poland

Main objective of analysis was the relationship between subsidization of large-scale farms and their technical efficiency. Besides, research included the identification of the factors that determine this efficiency of farms. Financial support should motivate to increase the production capacity of farms, as it will significantly reduce the cost of capital. It can be verified by determi-nation of the technical performance indicators and economic indicators. The implementation of the Common Agricultural Policy (CAP) instruments changed relationships between the factors of production. Subordination of Polish agricultural sector to the principles of the CAP, led many scientists to analyze the problem of affection of CAP instruments on achievement of objectives outlined in the Treaties of Rome. Author performed research of 78 large-scale farms (> 100 ha UAA) each year (panel data 2007-2011) and estimated technical efficiency indicators by using Stochastic Frontier Analysis (SFA) and Data Envelopment Analysis (DEA). The sample was divided into two groups: (1) farms with a dominance (60%) of crop production and (2) other farms (with a dominance of livestock or with the mixed production). Parametric method was supplemented to non-parametric approach. Then it was made an analysis of a set of determinants of technical efficiency by using panel models. The analysis of the results showed that the parametric approach was more resistant to the heterogeneity of the sample (its inhomogeneity) than the envelope data (DEA). Own research failed to establish a set of determinants of technical efficiency, which largely corresponds with those of other authors. The methods used here are the most popular ways of calculating technical efficiency. Due to the nature of the agricultural sector the superior properties of the SFA method was confirmed.