Impact of subsidies on technical efficiency of meat processing companies

Abstract

The paper deals with the technical efficiency analysis of meat processors in the Czech Republic and evaluates an impact of subsidies on companies' technical efficiency. Albertina database which collects accounting data of the Czech meat processors was used for the empirical analysis for the programming period 2007-2013. Subsidies data was collected from the public register of recipients of the Ministry of Agriculture of the Czech Republic. In total, 207 meat processors were analysed. The methodological approach taken in this study is based on translogarithmic production function and Stochastic Frontier Analysis. True Random Effects model, and Battese and Coelli model were used to evaluate the impact of subsidies on technical efficiency. The results of both used methods indicate positive impact of subsidies on meat processors technical efficiency. Material input displays the highest elasticity; the lowest elasticity belongs to production factor Capital. Technical change has a positive impact on production.