  Total factor productivity (TFP) is a key determinant of farm development, a
sector that receives substantial public support. The issue has taken on great
importance today, where the conflict in Ukraine has led to repercussions on the
cereal markets. This paper investigates the effects of different subsidies on
the productivity of cereal farms, accounting that farms differ according to the
level of TFP. We relied on a three-step estimation strategy: i) estimation of
production functions, ii) evaluation of TFP, and iii) assessment of the
relationship between CAP subsidies and TFP. To overcome multiple endogeneity
problems, the System-GMM estimator is adopted. The investigation embraces farms
in France, Germany, Italy, Poland, Spain and the United Kingdom using the FADN
samples from 2008 to 2018. Adding to previous analyses, we compare results from
different countries and investigate three subsets of farms with varying levels
of TFP. The outcomes confirm how CAP negatively impacts farm TFP, but the
extent differs according to the type of subsidies, the six countries and,
within these, among farms with different productivity groups. Therefore there
is room for policy improvements in order to foster the productivity of cereal
farms.
