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Participation In Set Aside: What Determines The Opting In Price?

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  • D. Roberts
  • J. Froud
  • R. W. Fraser

Abstract

This paper analyses the decision facing Community farmers of whether or not to participate in the voluntary rotational set aside scheme. For each individual producer, an “indifference price” for cereals can be identified at which the expected profit from either opting in or out of the scheme is identical. An expected utility model is used to investigate the influence of various factors on the level of indifference price and hence the uptake of set aside. Empirical analysis, based on FBS farm level data, suggests that this price is relatively insensitive to the uncertainty faced by the farmer and the farmer's attitude to risk. It is, however, sensitive both to the key policy variables and to the farm's cost structure and yield. The results presented help explain the initial high take up of set aside in England.

Suggested Citation

  • D. Roberts & J. Froud & R. W. Fraser, 1996. "Participation In Set Aside: What Determines The Opting In Price?," Journal of Agricultural Economics, Wiley Blackwell, vol. 47(1‐4), pages 89-98, January.
    • Handle: RePEc:bla:jageco:v:47:y:1996:i:1-4:p:89-98
    DOI: 10.1111/j.1477-9552.1996.tb00673.x
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    References listed on IDEAS

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    1. Allanson, Paul, 1993. "The Impact of the Modulation Proposal in the MacSharry Plan for Reform of the Cereals Regime," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 20(1), pages 99-109.
    2. David R. Lee & Peter G. Helmberger, 1985. "Estimating Supply Response in the Presence of Farm Programs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(2), pages 193-203.
    3. R. Fraser, 1993. "Set‐Aside Premiums And The May 1992 Cap Reforms," Journal of Agricultural Economics, Wiley Blackwell, vol. 44(3), pages 410-417, September.
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    Cited by:

    1. Moro, Daniele & Sckokai, Paolo, 1999. "Modelling the CAP Arable Crop Regime in Italy : Degree of Decoupling and Impact of Agenda 2000," Cahiers d'Economie et de Sociologie Rurales (CESR), Institut National de la Recherche Agronomique (INRA), vol. 53.
    2. Rob Fraser, 2009. "Land Heterogeneity, Agricultural Income Forgone and Environmental Benefit: An Assessment of Incentive Compatibility Problems in Environmental Stewardship Schemes," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(1), pages 190-201, February.
    3. Alain Carpentier & Hervé Guyomard & Chantal Le Mouël, 1998. "Consistency between environmental and competitiveness objectives of agricultural policies: economics of price support, set-aside, direct payments and other Common Agricultural Policy instruments," Chapters, in: John M. Antle & Joseph N. Lekakis & George P. Zanias (ed.), Agriculture, Trade and the Environment, chapter 5, pages 89-111, Edward Elgar Publishing.
    4. Vavra, Pavel & Smith, Vincent H., 1996. "Cereals Area Supply Response in the U.K.: The Effects of CAP Reform," Research Discussion Papers 256817, Montana State University, Department of Agricultural Economics and Economics, Trade Research Center.
    5. Bob Crabtree & Neil Chalmers & Nicola‐Jo Barron, 1998. "Information for Policy Design: Modelling Participation in a Farm Woodland Incentive Scheme," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(3), pages 306-320, September.
    6. Davies, B.B. & Hodge, I.D., 2007. "Exploring environmental perspectives in lowland agriculture: A Q methodology study in East Anglia, UK," Ecological Economics, Elsevier, vol. 61(2-3), pages 323-333, March.
    7. Fatima Lambarraa & Spiro Stefanou & Teresa Serra & José M. Gil, 2009. "The impact of the 1999 CAP reforms on the efficiency of the COP sector in Spain," Agricultural Economics, International Association of Agricultural Economists, vol. 40(3), pages 355-364, May.
    8. Hild Rygnestad & Rob Fraser, 1996. "Land Heterogeneity And The Effectiveness Of Cap Set‐Aside," Journal of Agricultural Economics, Wiley Blackwell, vol. 47(1‐4), pages 255-260, January.
    9. Rob Fraser, 2001. "Using Principal‐Agent Theory to Deal with Output Slippage in the European Union Set‐Aside Policy," Journal of Agricultural Economics, Wiley Blackwell, vol. 52(2), pages 29-41, May.
    10. Yang, Wanhong & Isik, Murat, 2003. "Integrating Farmer Decision-Making to Target Land Retirement Programs," 2003 Annual meeting, July 27-30, Montreal, Canada 22062, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Moro, Daniele & Sckokai, Paolo, 1998. "Modelling The 1992 Cap Reform: Degree Of Decoupling And Future Scenarios," 1998 Annual meeting, August 2-5, Salt Lake City, UT 21015, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Rob Fraser, 1997. "Land Heterogeneity And The May 1992 Reform Of Cap Cereal Price Support," Journal of Agricultural Economics, Wiley Blackwell, vol. 48(1‐3), pages 65-70, January.

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