Bridging the gap: the impact of compensatory measures on mountain farming in Piedmont

This study examines the impact of the Rural Development Program (RDP) on reducing income disparities between farms in mountainous and non-mountainous areas in Piedmont, Italy. Using Farm Accounting Data Network data from 2012–2022, the analysis focuses on cattle, sheep and goats, and fruit farms, with 525 farms (3,171 observations; 36% in mountainous areas). A pooled multivariate regression assesses income disparities excluding RDP support, RDP’s effectiveness in mitigating gaps, and the role of compensatory allowance. The findings indicate that significant income disparities are primarily observed in small farms specialized in cattle and sheep and goats, with mountain farms facing a net shortfall of €1,319 and €2,384 per hectare, respectively. While compensatory allowance support helps reduce this gap – by 8.93% for cattle farms and 5.28% for sheep and goat farms – a substantial disparity remains. Bridging the gap entirely would require doubling compensatory payments to €340 per hectare, though alternative strategies are discussed.