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Decoupling Direct Payments and the Dynamics of Decisions under Price Risk in Cattle Farms

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  • Aude Ridier
  • Florence Jacquet

Abstract

The impact of decoupling direct payments from production on producers' decisions, taking account of price uncertainty and risk aversion, is analysed through a multi‐period mathematical programming model. This model is applied to beef cattle farms in two French regions: Limousin and Pays de la Loire. The technical coefficients are represented by an engineering production function estimated for both regions. The behavioural parameters have been obtained through a survey and model calibration. Policy changes have been modelled through different simulation scenarios relating to the decoupling of direct payments. Model results show that decoupling policies produce a more homogenous response from different types of farmers. The share of cattle activities on farms decreases and the production techniques become less intensive.

Suggested Citation

  • Aude Ridier & Florence Jacquet, 2002. "Decoupling Direct Payments and the Dynamics of Decisions under Price Risk in Cattle Farms," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(3), pages 549-565, November.
    • Handle: RePEc:bla:jageco:v:53:y:2002:i:3:p:549-565
    DOI: 10.1111/j.1477-9552.2002.tb00037.x
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    1. Baker, C.B. & Barry, Peter J. & Lee, Warren F. & Olson, Carl E. & Hochman, Eithan & Rausser, Gordon S. & Kottke, Marvin W., 1977. "Economic Growth of the Agricultural Firm," Western Region Archives 260636, Western Region - Western Extension Directors Association (WEDA).
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    Cited by:

    1. Lelyon, Baptiste & Chatelier, Vincent & Daniel, Karine, 2011. "Decoupling and prices: determinant of dairy farmers’ choices?," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 92(1).
    2. Vincent Chatellier, 2006. "Le découplage et les droits à paiement unique dans les exploitations laitières et bovins-viande en France," Cahiers d'Economie et Sociologie Rurales, INRA Department of Economics, vol. 78, pages 53-80.
    3. Lelyon, Baptiste & Daniel, Karine & Chatellier, Vincent, 2008. "Decoupling and prices: determinant of dairy farmers’ choices? A model to analyse impacts of the 2003 CAP reform," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44250, European Association of Agricultural Economists.
    4. Zein Kallas & Teresa Serra & Jos頠 M. Gil, 2012. "Effects of policy instruments on farm investments and production decisions in the Spanish COP sector," Applied Economics, Taylor & Francis Journals, vol. 44(30), pages 3877-3886, October.
    5. Marian Rizov & Jan Pokrivcak & Pavel Ciaian, 2013. "CAP Subsidies and Productivity of the EU Farms," Journal of Agricultural Economics, Wiley Blackwell, vol. 64(3), pages 537-557, September.
    6. Lescot, Jean-Marie & Rousset, Sylvain & Souville, Genevieve, 2011. "Assessing Investment in Precision Farming for Reducing Pesticide Use in French Viticulture," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114387, European Association of Agricultural Economists.
    7. J.Ph. Boussemart & K. Kerstens & S. Blancard & W. Briec, 2007. "Technology Adoption in French Agriculture and the role of Financial Constraints," Post-Print hal-00287979, HAL.
    8. Mosnier, Claire & Ridier, Aude & Kphaliacos, Charilaos & Carpy-Goulard, Françoise, 2009. "Economic and environmental impact of the CAP mid-term review on arable crop farming in South-western France," Ecological Economics, Elsevier, vol. 68(5), pages 1408-1416, March.
    9. Czekaj, Stefania & Czubak, Wawrzyniec & Góral, Justyna & Kagan, Adam & Majewski, Edward & Poczta, Walenty & Sadowski, Arkadiusz & Wąs, Adam, 2013. "Impact of the reformed direct payments on the Polish farms," Multiannual Program Reports 182522, Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI).
    10. Flichman, Guillermo & Jacquet, Florence, 2003. "Le couplage des modèles agronomiques et économiques : intérêt pour l'analyse des politiques," Cahiers d'Economie et de Sociologie Rurales (CESR), Institut National de la Recherche Agronomique (INRA), vol. 67.
    11. Ricome, Aymeric & Chaib, Karim & Ridier, Aude & Kephaliacos, Charilaos & Carpy-Goulard, Francoise, 2016. "The Role of Marketing Contracts in the Adoption of Low-Input Production Practices in the Presence of Income Supports: An Application in Southwestern France," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 41(3), pages 1-29.
    12. O'Donoghue, Erik J. & Whitaker, James B., 2006. "How distorting are direct payments?," 2006 Annual meeting, July 23-26, Long Beach, CA 21247, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Guillermo Flichman & Florence Jacquet, 2003. "Le couplage des modèles agronomiques et économiques : intérêt pour l'analyse des politiques," Post-Print hal-01201042, HAL.
    14. Rose, G. & Mulder, H.A. & Thompson, A.N. & van der Werf, J.H.J. & van Arendonk, J.A.M., 2014. "Varying pasture growth and commodity prices change the value of traits in sheep breeding objectives," Agricultural Systems, Elsevier, vol. 131(C), pages 94-104.
    15. Jean-Christophe J.-C. Bureau & Alexandre Gohin & Sébastien Jean, 2007. "The CAP and WTO negotiation [La PAC et la négociation OMC]," Post-Print hal-02821142, HAL.
    16. Diakité, Z.R. & Corson, M.S. & Brunschwig, G. & Baumont, R. & Mosnier, C., 2019. "Profit stability of mixed dairy and beef production systems of the mountain area of southern Auvergne (France) in the face of price variations: Bioeconomic simulation," Agricultural Systems, Elsevier, vol. 171(C), pages 126-134.
    17. Guillermo Flichman & Florence Jacquet, 2003. "Le couplage des modèles agronomiques et économiques : intérêt pour l'analyse des politiques," Cahiers d'Economie et Sociologie Rurales, INRA Department of Economics, vol. 67, pages 51-69.
    18. repec:dau:papers:123456789/1735 is not listed on IDEAS
    19. Mosnier, C. & Agabriel, J. & Lherm, M. & Reynaud, A., 2009. "A dynamic bio-economic model to simulate optimal adjustments of suckler cow farm management to production and market shocks in France," Agricultural Systems, Elsevier, vol. 102(1-3), pages 77-88, October.
    20. Serra, Teresa & Goodwin, Barry K. & Featherstone, Allen M., 2011. "Risk behavior in the presence of government programs," Journal of Econometrics, Elsevier, vol. 162(1), pages 18-24, May.

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