The efficiency of agricultural spending in Italy: A territorial analysis

Abstract

This paper assesses the efficiency of public agricultural expenditure in each Italian region through the analysis of regional budgets, both as a whole and in relation to specific agricultural policy measures. The degree of integration/complementarity between regional funds and Community funds of the second pillar of the CAP is also evaluated, in order to determine whether European resources are used by the Regions as a substitute for or in addition to regional measures. In Italy, public agricultural funding comes from three sources: the EU, the State, and the regions. While the literature on the effectiveness and efficiency of public spending in agriculture focuses on EU funds, the present research also takes into consideration the agricultural spending of Regions.This original analysis of agricultural spending at the regional level has been made possible by the databank of the CREA (Council for Agricultural Research and Economics), which has been gathering information on the allocations, payments, and remaining balances of regional accounts since 1990. The expenditure items for the agricultural sector included in the regional budgets were reclassified according to an original methodology created by the INEA (National Institute of Agricultural Economics, today CREA). The results show that the overall efficiency of public expenditure has improved over the last two decades (from less than 40% in 2000 to just over 50% in 2019). This improvement is quite evident in the South and the Islands and less so in the North. Agricultural policy measures that can be defined as "short term measures" (contributions to public and private entities involved in agricultural and forestry activities for running costs, such as salaries, telephone, electricity, etc.) show a good spending capacity, while measures requiring planning, such as business investments, still present difficulties. As regards integration/complementarity between regional funds and EU Fund for Rural Development Programmes (RDPs), the regions have been classified depending or whether or not they differentiate between the RDP financing and Budget financing. In the most recent period of 2014-2020, most regions have tended to target both sources of funding to support the same types of priority activities.