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How Effective is Farmer Early Retirement Policy?

Listed author(s):
  • Paul Caskie
  • John Davis
  • Michael Wallace
Registered author(s):

    Financial support for EU farmers seeking early retirement is a discretionary element of CAP rural development policy and some EU member states, most notably France, Ireland and Greece have chosen to implement the measure. We explore whether the introduction of such schemes is likely to represent good value for money. We use data from Northern Ireland, a region with a relatively small-scale family-farm structure, where there have been periodic calls from farmer groups to introduce support for early retirement. We estimate the benefits that might arise from the introduction of such a scheme using FADN data and a separate survey of 350 farmers aged 50 to 65. We find that farm scale is a significant determinant of profit per hectare but that operator age is not. Benefits from releasing land through an early retirement scheme are conditional on such transfers bringing about significant farm expansion and changes in land use. Even when these conditions are satisfied, however, pensions payments of only about one-third the statutory maximum could be justified in a best-case scenario. Almost a quarter of all payments would incur deadweight losses, i.e., go to farmers who would be retiring anyway. Overall, the economic case for such a scheme is considered to be weak. Copyright (c) 2008 The Authors. Journal compilation (c) The Agricultural Ecomomics Society and the European Association of Agricultural Economists 2008.

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    Article provided by The Agricultural Economics Society in its journal EuroChoices.

    Volume (Year): 7 (2008)
    Issue (Month): 3 (December)
    Pages: 38-44

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    Handle: RePEc:bla:eurcho:v:7:y:2008:i:3:p:38-44
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