Quarterly Journal of International Agriculture No. 1/06
Impact of debts and subsidies on agricultural production: farm-data evidence
Irina V. Bezlepkina and Alfons G.J.M. Oude Lansink
Wageningen University, The Netherlands
Abstract
This study used a production function approach and farm-level data
from 19,000 Russian large-scale farms for the period 1995-2000 to
analyse the impact of debts and subsidies on production. Regional
differences and farm-specific characteristics were accounted for by
using fixed-effect estimation. The results showed a negative relation
between subsidy and production, implying the presence of soft budget
constraints, and a positive relation between debts and production,
suggesting that the more debts (to suppliers) the enterprise is able to
generate, the more secure its production would be. The results
indicated that such inputs as labour, land, livestock, capital and
materials were overused. Russian agricultural enterprises tended to use
labour intensive technologies.
Keywords: productivity, soft budget constraints, Russia, agricultural registry
JEL: Q 010
Vol. 45 (2006), No. 1: 7-34