Centre for Economic and Regional Studies Hungarian Academy of Sciences Centre of Excellence

Hungarian agriculture is expected to experience greater risks due to more variability in crop productivity due to increasing yearly average temperatures and extreme precipitation patterns. This study investigates the effect of changing climatic conditions on productivity, using a Hungarian sample of crop producers for a 12-year time period. Our empirical analysis employs True Fixed Effects frontier models of Farm Accountancy Data Network data that are merged with specific meteorological data representatively maintained for seeding, vegetative, and generative periods for cereals, oil seed and protein crops, along with soil quality and usage-related data. Estimations indicate that climate variables have significant impacts on technical efficiency. In addition, calculation suggest that an increase in temperature during seeding and vegetative periods, combined with higher precipitation levels in May and June, will reduce crop farmers’ production frontier. Estimations explain the variance, while the technical efficiency (TE) scores emphasize the impact of the difference in soil quality and its water absorption capacity.