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The study focuses on testing the hypothesis that the subsidy system of the Common Agricultural Reform in 1992 (CAP’92) drove to changes in farm efficiency towards the thereby claimed objectives. With sequential applications of semiparametric methods we succeed to identify the impact of the direct payments on environmental adaptation, productivity and efficiency before and after CAP’92 without restrictive model specifications. We find that the claimed objectives of the EU subvention policy were met only partly, but that the CAP’92 was, however, a step forward. Our case study uses large Spanish data sets of animal orientated farms.

An Empirical Assessment of the EU Agricultural Policy Based on Firm Level Data