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Disinvestment, Farm Size, and Gradual Farm Exit: The Impact of Subsidy Decoupling in a European Context

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  • Andrius Kazukauskas
  • Carol Newman
  • Daragh Clancy
  • Johannes Sauer

Abstract

The recent reform of the Common Agricultural Policy, which decouples farm subsidies from production, is expected to impact on farmers' production decisions. We perform a cross-country farm-level empirical analysis of farmers' production responses to these reforms using a panel dataset for the EU15 countries for the period 2001--2007. We apply quasi-experimental empirical methods and find that the probability of a farm disinvesting decreased due to the policy change for most farms. However, the policy change facilitated exit for farms engaged in livestock production and those that were already in the process of leaving the sector. Copyright 2013, Oxford University Press.

Suggested Citation

  • Andrius Kazukauskas & Carol Newman & Daragh Clancy & Johannes Sauer, 2013. "Disinvestment, Farm Size, and Gradual Farm Exit: The Impact of Subsidy Decoupling in a European Context," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(5), pages 1068-1087.
    • Handle: RePEc:oup:ajagec:v:95:y:2013:i:5:p:1068-1087
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    File URL: http://hdl.handle.net/10.1093/ajae/aat048
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