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Effects Of Policy Instruments On Farm Investments And Production Decisions In The Spanish Cop Sector

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  • Kallas, Zein
  • Serra, Teresa
  • Gil, Jose Maria

Abstract

Our paper assesses the impacts of the partially decoupled (PD) scheme, implemented during the 1990s and first half of the 2000s in the framework of the Common Agricultural Policy (CAP), on on-farm investment as well as on other production decisions. The Spanish COP sector was taken as a case study due to its economic and political relevance. The empirical analysis is applied on farm-level data from the Farm Accountancy Data Network (FADN), observed from 2000 to 2004, based on. We use a reduced-form application of the dual model of investment under uncertainty and a system of censored and non censored equations is estimated. PD payments are found to increase short-run production and to generate a statically significant increase in the investment in farm assets. Results also show the importance of assessing the effects of PD payments in a dynamic framework as the one applied in this paper.

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Bibliographic Info

Paper provided by International Association of Agricultural Economists in its series 2009 Conference, August 16-22, 2009, Beijing, China with number 49971.

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Date of creation: 2009
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Handle: RePEc:ags:iaae09:49971

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Keywords: farm investments; Common Agricultural Policy; decoupling; production; Agricultural and Food Policy; Production Economics; Q12; Q18; D80;

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Cited by:
  1. Moro, Daniele & Sckokai, Paolo, 2013. "The impact of decoupled payments on farm choices: Conceptual and methodological challenges," Food Policy, Elsevier, vol. 41(C), pages 28-38.

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