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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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    1. repec:spr:agfoec:v:5:y:2017:i:1:d:10.1186_s40100-017-0078-9 is not listed on IDEAS
    2. Ani L. Katchova & Mary Clare Ahearn, 2017. "Farm entry and exit from US agriculture," Agricultural Finance Review, Emerald Group Publishing, vol. 77(1), pages 50-63, May.
    3. Cathal O'Donoghue & Thia Hennessy, 2014. "Chapter 03: The Agri-Food Sector," Chapters from Rural Economic Development in Ireland,in: Rural Economic Development in Ireland, edition 1, chapter 3 Rural Economy and Development Programme,Teagasc.
    4. Andrius Kazukauskas & Carol Newman & Johannes Sauer, 2014. "The impact of decoupled subsidies on productivity in agriculture: a cross-country analysis using microdata," Agricultural Economics, International Association of Agricultural Economists, vol. 45(3), pages 327-336, May.
    5. Wagener, Andreas & Zenker, Juliane, 2018. "Decoupled but not neutral: The effects of stochastic transfers on investment and incomes in rural Thailand," TVSEP Working Papers wp-008, Leibniz Universitaet Hannover, Institute of Development and Agricultural Economics, Project TVSEP.
    6. Biagia De Devitiis & Ornella Wanda Maietta, 2015. "Shadow Prices of Human Capital in Agriculture. Evidence from European FADN Regions," CSEF Working Papers 415, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    7. Edward Knapp & Jason Loughrey, 2017. "The single farm payment and income risk in Irish farms 2005–2013," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 5(1), pages 1-15, December.
    8. Grüner, Hans Peter & Muller, Daniel, 2016. "Measuring political information rents: Evidence from the European agricultural reform," European Journal of Political Economy, Elsevier, vol. 43(C), pages 107-126.
    9. Aubert, Magali & Enjolras, Geoffroy, 2015. "Are short food supply chains a solution for farms facing financial difficulties?," 2015 Conference, August 9-14, 2015, Milan, Italy 211622, International Association of Agricultural Economists.
    10. Simola, A., 2018. "Choice of product mix and agricultural subsidies - evidence from a quasi-experiment in Agenda 2000 CAP reform," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277534, International Association of Agricultural Economists.
    11. Zheng, Yanan & Goddard, Ellen W. & Qiu, Feng, 2018. "Exploring the Effect of Disease Outbreaks on Farm Structure Change: A Dynamic Analysis for Canadian Pig Industry," 2018 Annual Meeting, August 5-7, Washington, D.C. 273801, Agricultural and Applied Economics Association.
    12. Voica, Daniel C., 2014. "Are Subsidies Decoupled from Production in the Presence of Incomplete Financial Markets?," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169788, Agricultural and Applied Economics Association.
    13. repec:ags:ijfaec:266462 is not listed on IDEAS

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