Output price risk and productivity growth in Greek agriculture

Abstract

The objective of this paper is twofold. First, is to estimate a dual model of price risk in Greek agriculture and to assess the effects of this type of risk on farmers' production decisions. Second, is to analyze the rate of Total Factor Productivity (TFP)in the sector, during 1968-96, into components of interest. The empirical results suggest that the Greek farmers are risk averse. When the variance of output price increases by 100% the Greek farmers require an increase in the expected output price by 9.1% in order to maintain the same supply level. The technical change effects are the most important determinant of TFP growth, followed by the scale effects, the price risk effects, and the effects arising from the adjustment in the fixed factor.

JEL Classification: D24, Q12