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EU income stabilization tool: potential impacts, financial sustainability and farmer’s risk aversion

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  • Simone Severini

    (Università degli Studi della Tuscia)

  • Cinzia Zinnanti

    (Università degli Studi della Tuscia)

  • Valeria Borsellino

    (Università degli Studi di Palermo)

  • Emanuele Schimmenti

    (Università degli Studi di Palermo)

Abstract

The Income Stabilization Tool, a risk management scheme introduced within the Common Agricultural Policy (CAP) 2014–2020, could help European Union farmers manage the income risks they face. This study assesses the potential impact of implementing this tool through the maximum level of contribution to the fund which determines an indifference to participate in the fund and its financial sustainability. The study relies on an expected utility approach and assesses the variability of loss ratios over time using a sample of Italian hazelnut farms as a case study. The participation depends on the level of farmers' contributions and their degree of risk aversion. However, the CAP public support makes the scheme financially sustainable.

Suggested Citation

  • Simone Severini & Cinzia Zinnanti & Valeria Borsellino & Emanuele Schimmenti, 2021. "EU income stabilization tool: potential impacts, financial sustainability and farmer’s risk aversion," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 9(1), pages 1-21, December.
    • Handle: RePEc:spr:agfoec:v:9:y:2021:i:1:d:10.1186_s40100-021-00205-4
    DOI: 10.1186/s40100-021-00205-4
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    Cited by:

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    4. Giuseppe Timpanaro & Gaetano Chinnici & Roberta Selvaggi & Giulio Cascone & Vera Teresa Foti & Alessandro Scuderi, 2023. "Farmer?s adoption of agricultural insurance for Mediterranean crops as an innovative behavior," Economia agro-alimentare, FrancoAngeli Editore, vol. 25(2), pages 155-188.
    5. Kamel Louhichi & Daël Merisier, 2023. "Potential impacts of the Income Stabilisation Tool on farmers' income and crop diversity: a French case study [Impacts potentiels de l'outil de stabilisation des revenus sur les revenus des agricul," Post-Print hal-04195630, HAL.

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