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Modelling The Cap Arable Crop Regime Under Uncertainty

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  • Sckokai, Paolo
  • Moro, Daniele

Abstract

In this paper we evaluate empirically the absolute and relative size of risk-related effects of a farm policy change, with specific reference to the CAP arable crop regime. We adopt a dual framework under non linear mean-variance risk preferences, which incorporates the impact of price uncertainty in the specific decision-making structure of EU arable crop producers. A system of output supply, input demand and land allocation equations has been estimated on a sample of Italian specialised arable crop farms, which allows us to derive elasticities with respect to all the relevant exogenous variables, including those related to risk. The simulation of the impact of an Agenda 2000-type of shock confirms that the size of risk effects is important in evaluating farmer's output responses. This may have important implications for the revision of "green box" criteria in the context of the current WTO negotiations. Keywords: Risk effects; Common Agricultural Policy; Decoupling; Duality.

Suggested Citation

  • Sckokai, Paolo & Moro, Daniele, 2002. "Modelling The Cap Arable Crop Regime Under Uncertainty," 2002 Annual meeting, July 28-31, Long Beach, CA 19860, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea02:19860
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    References listed on IDEAS

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    6. Guyomard, Herve & Baudry, Marc & Carpentier, Alain, 1996. "Estimating Crop Supply Response in the Presence of Farm Programmes: Application to the CAP," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 23(4), pages 401-420.
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    Cited by:

    1. Roche, M. & McQuinn, K., 2003. "Efficient allocation of land in a decoupled world," Economics, Finance and Accounting Department Working Paper Series n1190103, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.
    2. Sckokai, Paolo & Moro, Daniele & Platoni, Silvia, 2008. "Farm-Level Data Model For Agricultural Policy Analysis: A Two-Way Ecm Approach," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6693, European Association of Agricultural Economists.
    3. Zein Kallas & Teresa Serra & José 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.
    4. Lambarraa, Fatima & Stefanou, Spiro E. & Serra, Teresa & Gil, Jose Maria, 2008. "The impact of the CAP reforms on the efficiency of the COP sector in Spain," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44408, European Association of Agricultural Economists.
    5. Frahan, Bruno Henry de & Tritten, Christian, 2002. "Differentiated Demand and Supply of Wheat under Alternative European Trade Policies," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24831, European Association of Agricultural Economists.
    6. Thia Hennessy & Mark O’ Brien, 2007. "Is off-farm income driving on-farm investment?," Working Papers 0704, Rural Economy and Development Programme,Teagasc.
    7. Stéphane Blancard & Jean-Philippe Boussemart & Walter Briec & Kristiaan Kerstens, 2006. "Short- and Long-Run Credit Constraints in French Agriculture: A Directional Distance Function Framework Using Expenditure-Constrained Profit Functions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 351-364.
    8. Elisa Gatto & Guido Signorino, 2011. "Long-run relationship between crop-biodiversity and cereal production under the CAP reform: evidence from Italian regions," ERSA conference papers ersa11p964, European Regional Science Association.
    9. Serra, Teresa & Zilberman, David & Goodwin, Barry K. & Featherstone, Allen M., 2005. "Effects of Decoupling on the Average and the Variability of Output," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24601, European Association of Agricultural Economists.
    10. Thia Hennessy & Tahir Rehman, 2006. "Modelling the Impact of Decoupling on Structural Change in the Farming Sector: integrating econometric and optimisation models," Working Papers 0601, Rural Economy and Development Programme,Teagasc.
    11. James Breen & Fiona Thorne & Thia Hennessy, 2005. "Decoupled Payments and the Decision to Produce," Working Papers 0502, Rural Economy and Development Programme,Teagasc.
    12. Breen, James P. & Hennessy, Thia C. & Thorne, Fiona S., 2005. "The effect of decoupling on the decision to produce: An Irish case study," Food Policy, Elsevier, vol. 30(2), pages 129-144, April.
    13. Serra, Teresa & Zilberman, David & Goodwin, Barry K. & Hyvonen, Keijo, 2004. "Replacement Of Price Support Measures By Direct Payments In Agricultural Policies: Does This Benefit The Environment? The Effects Of The Post-1992 Cap On Pest Control In The E.U," 2004 Annual meeting, August 1-4, Denver, CO 20043, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    14. Serra, Teresa & Zilberman, David & Goodwin, Barry K. & Featherstone, Allen M., 2005. "Decoupling farm policies: how does this affect production?," 2005 Annual meeting, July 24-27, Providence, RI 19194, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    15. Boyle, Gerry & Conniffe, Denis & McQuinn, Kieran, 2005. "A New Mean Standard Deviation Utility Function and the Behaviour Towards Risk of Specialist Irish Agricultural Producers: 1988-1997," Research Technical Papers 5/RT/05, Central Bank of Ireland.
    16. BEL François & LACROIX Anne & SALANIE François & THOMAS Alban, 2006. "Evaluating the impact of CAP reforms on land use and the environment: a two-step estimation with multiple selection rules and panel data," LERNA Working Papers 06.13.206, LERNA, University of Toulouse.
    17. Sckokai, Paolo & Moro, Daniele, 2005. "Modelling the Impact of the CAP Reform on Farm Investments," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24468, European Association of Agricultural Economists.
    18. Polome, Philippe & Fernagut, Bruno & Harmignie, Olivier & Frahan, Bruno Henry de, 2005. "Multi-input Multi-output Farm-level Cost Function: A Comparison of Least Squares and Entropy Estimators," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24727, European Association of Agricultural Economists.
    19. Teresa Serra & Spiro Stefanou & José M. Gil & Allen Featherstone, 2009. "Investment rigidity and policy measures," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 36(1), pages 103-120, March.
    20. Emvalomatis, Grigorios & Oude Lansink, Alfons G.J.M. & Stefanou, Spiro E., 2008. "An Examination of the Relationship Between Subsidies on Production and Technical Efficiency in Agriculture: The Case of Cotton Producers in Greece," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6673, European Association of Agricultural Economists.
    21. Gracia, Azucena & de Magistris, Tiziana & Casado, Jose Maria, 2008. "The Effect Of The New Single Farm Payment In Irrigated Agriculture: The Case Of Spain," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6590, European Association of Agricultural Economists.
    22. Platoni, Silvia & Sckokai, Paolo & Moro, Daniele, 2008. "Panel Data Estimation Techniques for Farm-level Data Model," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44268, European Association of Agricultural Economists.
    23. Joe Dewbre & Jesús Antón & Wyatt Thompton, 2001. "The Transfer Efficiency and Trade Effects of Direct Payments," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(5), pages 1204-1214.
    24. Katranidis, Stelios D. & Kotakou, Christina A., 2008. "Are CAP Decoupling Policies Really Production Neutral?," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44184, European Association of Agricultural Economists.

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