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The effect of agricultural policy change on income risk in Swiss agriculture

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  • El Benni, Nadja
  • Finger, Robert
  • Mann, Stefan

Abstract

The study examines the effect of agricultural policy reforms on income variability of Swiss farmers. The observed heterogeneity in income risks across farms and time is explained with farm and regional characteristics. FADN data are used to construct coefficients of variation of total household income and gross revenues at farm-level over the period 1992-2009. Applying linear mixed effect models the effects of off-farm income, direct payments, farm size, specialisation and liquidity on gross revenue and household income variability in three different production regions are measured. The switch from market-based support to direct payments decreased the variability of farm revenues and household income. Off-farm income has a positive and farm size a negative effect on revenue risk. The opposite is true for household income risk. Specialisation increases revenue and household income risk. Direct payments serve as insurance for farmers and make them more willing to take risk from agricultural production.

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Bibliographic Info

Paper provided by European Association of Agricultural Economists in its series 123rd Seminar, February 23-24, 2012, Dublin, Ireland with number 122532.

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Date of creation: 23 Feb 2012
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Handle: RePEc:ags:eaa123:122532

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Keywords: income risk; agricultural policy; direct payments; Risk and Uncertainty; Q12; Q14; Q18;

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Cited by:
  1. Lehmann, Niklaus & Finger, Robert, 2012. "Optimizing whole-farm management considering price and climate risks," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122533, European Association of Agricultural Economists.
  2. Finger, Robert, 2012. "How strong is the “natural hedge”? The effects of crop acreage and aggregation levels," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122538, European Association of Agricultural Economists.

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