The impact of EU accession on farms' technical efficiency in Hungary

Abstract

In this article the stochastic frontier analysis method is used to evaluate the technical efficiency of Hungarian farms before and after accession to the European Union (EU), and to investigate the efficiency determinants. The results show that EU membership has reversed the pre-accession process of efficiency decrease. But the other side of the coin is that access to higher post-accession subsidies contributes to lower efficiency of Hungarian farmers. The other remarkable finding is a seeming scarcity of labour on farms, which constrains their production and efficiency. The Hungarian government may therefore have to design specific national policies if its aim is to promote a farming system that uses labour and at the same time is competitive.