The impact of the Single Farm Payments on the Expenditure on Fertilizers and crop protection inputs: a comparative study of the Italian agriculture
The Health Check (HC) of the European Common Agricultural Policy in 2003 sped up the process of policy reforms toward decoupled payments in order to urge agricultural production to respond to market signals. However, since decoupled payments could generate “coupled” effects on production, it remains questionable how single farm payment (SFP) alters agricultural intensification. Therefore, through a comparative statistical analysis applied on Italian FADN regional data, this paper aims at evaluating whether the HC reform had positive impacts on the aggregate expenditure on fertilizers and crop production inputs. From the results, it is observed that the expansion of profitable crops like vegetables, flowers and vineyards, along with the receipt of SFP increased the expenditure of fertilizers and crop protection inputs. Such findings suggest that the HC reform has been so far effective in terms of aligning agricultural production to markets’ signals, but with the unintended consequence of higher intensification. We deduce that farmers may allocate higher proportions of SFP to purchase fertilizers and crop protection inputs whenever the opportunity of higher profits is found in those cropping activities requiring a higher intensive use of production’ factors.
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- Teresa Serra & David Zilberman & Barry K. Goodwin & Keijo Hyvonen, 2005. "Replacement of Agricultural Price Supports by Area Payments in the European Union and the Effects on Pesticide Use," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(4), pages 870-884.
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