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An impact assessment of EU's CAP income stabilisation payments

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  • Mary, Sebastien
  • Mishra, Ashok K.
  • Paloma, Sergio Gomez y

Abstract

To help farmers cope with increased income volatility, the EU may be introducing a farm income stabilisation payment in the post-2013 CAP. This payment would generally cover dramatic risk exceptionally leading to more than 30 per cent of income losses. This paper applies a model for a risk-averse farm producer facing output price, yield and policy uncertainty, to examine the impacts of the potential implementation of such payments in French crop specialist farms. The proposed scheme reduces farm income volatility, after 5 and 10 years, respectively by 2.08% and 1.19%. Interestingly, the proposed scheme reduces volatility in farm investments by about 11.45% after 5 years.

Suggested Citation

  • Mary, Sebastien & Mishra, Ashok K. & Paloma, Sergio Gomez y, 2013. "An impact assessment of EU's CAP income stabilisation payments," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149691, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea13:149691
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    File URL: http://purl.umn.edu/149691
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    References listed on IDEAS

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    1. David A. Hennessy, 1998. "The Production Effects of Agricultural Income Support Policies under Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 46-57.
    2. Kimura, Shingo & Anton, Jesus, 2011. "Farm Income Stabilization and Risk Management: Some Lessons from AgriStability Program in Canada," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114755, European Association of Agricultural Economists.
    3. Samira Bakhshi & Richard S. Gray, 2012. "Acreage Response to Whole Farm Income Stabilisation Programmes," Journal of Agricultural Economics, Wiley Blackwell, vol. 63(2), pages 385-407, June.
    4. Mary, Sebastien & Santini, Fabien & Boulanger, Pierre, 2013. "An Ex-Ante Assessment of CAP Income Stabilisation Payments using a Farm Household Model," 87th Annual Conference, April 8-10, 2013, Warwick University, Coventry, UK 158860, Agricultural Economics Society.
    5. S├ębastien Mary, 2013. "Assessing the Impacts of Pillar 1 and 2 Subsidies on TFP in French Crop Farms," Journal of Agricultural Economics, Wiley Blackwell, vol. 64(1), pages 133-144, February.
    6. Arathi Bhaskar & John C. Beghin, 2010. "Decoupled Farm Payments and the Role of Base Acreage and Yield Updating Under Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(3), pages 849-858.
    7. Paolo Sckokai & Daniele Moro, 2009. "Modelling the impact of the CAP Single Farm Payment on farm investment and output," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 36(3), pages 395-423, September.
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    Cited by:

    1. Feng, Siyi & Patton, Myles & Binfield, Julian C.R. & Davis, John, 2014. "Assessing the costs of risk management tools: A crop insurance scenario based on a stochastic partial equilibrium model approach," 88th Annual Conference, April 9-11, 2014, AgroParisTech, Paris, France 170538, Agricultural Economics Society.
    2. Loughrey, Jason & Thorne, Fiona & Hennessy, Thia, 2015. "The Direct Impact of Risk Management Tools on Farm Income: The Case of Irelands Spring Barley Producers," 89th Annual Conference, April 13-15, 2015, Warwick University, Coventry, UK 204228, Agricultural Economics Society.

    More about this item

    Keywords

    Income Stabilization Payment; EU; farm producer model; policy uncertainty; Agricultural and Food Policy; Q12; Q18;

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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