The role of pesticides and fertilizers in Czech cereal output and TFP growth: A flexible production function with endogenous inputs

Through a comprehensive analysis of the effects of fertilizers and pesticides on both output and total factor productivity (TFP) growth, this study contributes to the discussion on the impacts of agrochemical use in sustainable cereal production systems. Using FADN data from Czech cereal farmers from 2008 to 2020, the study employs a flexible translog (TL) production function alongside a proxy-variable approach that treats pesticides and fertilizers as endogenous inputs. This approach generates robust results that strengthen the evidence base essential for data-driven agricultural policy formulation. The findings highlight the critical role of fertilizers and pesticides as key inputs driving both output and TFP growth. Simulations suggest that reducing these inputs would lead to a decline in agricultural output; however, this outcome is not inevitable. The study finds that technological advancements, which also serve as important drivers of both output and TFP growth, can mitigate potential declines in agricultural output, ensuring a more sustainable transition. • The impact of agrochemical inputs on the Czech cereal production was evaluated. • The proxy variable approach with fertilizers and pesticides as variable inputs was used. • Changes in productivity emerged as a key driver of both output and TFP growth. • Reductions in fertilizer and pesticides resulted in only a slight decrease in output. • Technological advancements have the potential to offset the decline in agricultural output.