Do Farm Support Programs Reward Production Inefficiency?

Agricultural policy frameworks such as Growing Forward are intended to enhance the productivity and competitiveness of the Canadian agricultural sector and to stabilize farm income. This paper examines the relationship between production efficiency and government program payments. First, we find evidence of heterogeneity in production efficiency across farms. Second, we find a negative correlation between production efficiency and the share and level of program payments. The result of this study underscores the importance of understanding the link between technical inefficiency and government payments.