Are CAP Decoupling Policies Really Production Neutral?
AbstractThis paper examines the effects of decoupling policies on Greek cotton production. We estimate a system of cotton supply and input derived demand functions under the hypothesis that producers face uncertainty about prices. Using our estimation results we simulate the effects on cotton production under four alternative policy scenarios: the ‘Old’ CAP regime (i.e. the policy practiced until 2005), the Mid Term Review regime, a fully decoupled policy regime and a free trade-no policy scenario. Our results indicate that cotton production gradually decreases as more decoupled policies are adopted. Moreover, the fully decoupled payment is found to be non-production neutral since it indirectly affects producers’ decisions through the wealth effect.
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Bibliographic InfoPaper provided by European Association of Agricultural Economists in its series 2008 International Congress, August 26-29, 2008, Ghent, Belgium with number 44184.
Date of creation: 2008
Date of revision:
CAP; decoupling; uncertainty; Agricultural and Food Policy;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-11-25 (All new papers)
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