Impact of CAP direct payments on French farms’ managerial efficiency

This paper investigates the relationship between CAP direct payments and managerial efficiency for French crop farms. Managerial efficiency scores are calculated using a four-step approach that allows to disentangle managerial inefficiency from other technical inefficiency components, notably what is due to unfavourable environment conditions. Then managerial efficiency scores are regressed over a set of explanatory variables, including the CAP direct payments. Our empirical application, based on individual farm data over the period 1995-2002, shows that for French crop farms, there is a strongly significant negative relationship between managerial efficiency and CAP direct payments. This indicates that French crop farms that are more supported are less efficient, conform to expectations and to empirical results obtained in other studies.