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A method for evaluating the extent to which farm subsidies can be de-coupled before profitable arable land is abandoned in the European Union

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  • Fraser, Rob W.

Abstract

This paper evaluates concerns over the "abandonment of production" in the context of the recent CAP reform as it applies to the arable sector. The particular focus of the evaluation is on the extent to which the proposed "single farm payment" can be de-coupled from production and yet avoid the abandonment of land on which production is expected to be profitable. An analytical framework is developed which indicates the most important non-policy factors are the profitability of the land, the variability of yield and the grower's degree of risk aversion. The conclusion of a numerical analysis using this framework is that 85% de-coupling is unlikely to lead to abandonment of land in any arable region of the EU, and that 95% de-coupling is also unlikely to lead to abandonment in the majority of arable areas.

Suggested Citation

  • Fraser, Rob W., 2004. "A method for evaluating the extent to which farm subsidies can be de-coupled before profitable arable land is abandoned in the European Union," 2004 Conference (48th), February 11-13, 2004, Melbourne, Australia 58448, Australian Agricultural and Resource Economics Society.
    • Handle: RePEc:ags:aare04:58448
    DOI: 10.22004/ag.econ.58448
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    References listed on IDEAS

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    1. Bardsley, Peter & Harris, Michael, 1987. "An Approach To The Econometric Estimation Of Attitudes To Risk In Agriculture," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 31(2), pages 1-15, August.
    2. Rob Fraser, 2003. "An Evaluation of the Compensation Required by European Union Cereal Growers to Accept the Removal of Price Support," Journal of Agricultural Economics, Wiley Blackwell, vol. 54(3), pages 431-445, November.
    3. P. B. R. Hazell & M. Jaramillo & A. Williamson, 1990. "The Relationship Between World Price Instability And The Prices Farmers Receive In Developing Countries," Journal of Agricultural Economics, Wiley Blackwell, vol. 41(2), pages 227-241, May.
    4. Steven D. Hanson & George W. Ladd & Charles F. Curtiss, 1991. "Robustness of the Mean-Variance Model with Truncated Probability Distributions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(2), pages 436-445.
    5. Rulon D. Pope & Richard E. Just, 1991. "On Testing the Structure of Risk Preferences in Agricultural Supply Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(3), pages 743-748.
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