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Direct payments, crop insurance and the volatility of farm income. Some evidence in France and in Italy

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  • Enjolras, Geoffroy
  • Capitanio, Fabian
  • Aubert, Magali
  • Adinolfi, Felice

Abstract

Volatility of farm income represents a major challenge for farm management and the design of public policies. This paper measures the extent to which risk management tools, especially direct payments and crop insurance, can significantly reduce crop income volatility in France and in Italy. We use an original dataset of 9,555 farms for the period 2003-2007 drawn up from the Farm Accountancy Data Network (FADN) and three different econometric models to explain the volatility of crop income. The results are contrasted between the specialization of the farms and the two countries: Italian farms use management tools (CAP payments and crop insurance) so as to improve their income and to reduce its volatility (crop insurance, inputs). French farms use the same instruments to increase their income and therefore its volatility while they tend to substitute CAP payments to production. These results question the efficiency of structural policies aimed at stabilizing the farmers' income.

Suggested Citation

  • Enjolras, Geoffroy & Capitanio, Fabian & Aubert, Magali & Adinolfi, Felice, 2012. "Direct payments, crop insurance and the volatility of farm income. Some evidence in France and in Italy," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122478, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaa123:122478
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    Cited by:

    1. Magali Aubert & Geoffroy Enjolras, 2016. "Which stability for marketing channels? The case of short food supply chains in French agriculture," Post-Print hal-01404562, HAL.
    2. repec:spr:agfoec:v:5:y:2017:i:1:d:10.1186_s40100-017-0078-9 is not listed on IDEAS
    3. Banterle, Alessandro & Vandone, Daniela, 2013. "Price Volatility and Risk Management: The Case of Rice," 2013 International European Forum, February 18-22, 2013, Innsbruck-Igls, Austria 164766, International European Forum on Innovation and System Dynamics in Food Networks.
    4. Severini, Simone & Tantari, Antonella & Di Tommaso, Giuliano, 2016. "The instability of farm income. Empirical evidences on aggregation bias and heterogeneity among farm groups," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 5(1), April.
    5. S. Severini & A. Tantari & G. Di Tommaso, 2016. "Do CAP direct payments stabilise farm income? Empirical evidences from a constant sample of Italian farms," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 4(1), pages 1-17, December.
    6. Aubert, Magali & Enjolras, Geoffroy, 2015. "Do short food supply chains go hand in hand with environment-friendly practices?," 2015 Conference, August 9-14, 2015, Milan, Italy 211623, International Association of Agricultural Economists.
    7. Magali Aubert & Geoffroy Enjolras, 2015. "Stabilité ou instabilité des stratégies commerciales ? Le cas des circuits courts dans l'agriculture française," Post-Print hal-01296421, HAL.
    8. Natalia Brzezina & Birgit Kopainsky & Erik Mathijs, 2016. "Can Organic Farming Reduce Vulnerabilities and Enhance the Resilience of the European Food System? A Critical Assessment Using System Dynamics Structural Thinking Tools," Sustainability, MDPI, Open Access Journal, vol. 8(10), pages 1-32, September.
    9. Key, Nigel & Prager, Daniel & Burns, Christopher, 2015. "Household Income Volatility in U.S. Farm Households," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205407, Agricultural and Applied Economics Association;Western Agricultural Economics Association.

    More about this item

    Keywords

    Volatility; Direct payments; Insurance; France; Italy; FADN; Risk and Uncertainty; G22; Q14; Q18;

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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