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Investment behaviour of EU arable crop farms in selected EU countries and the impact of policy reforms

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  • Guastella, Giovanni
  • Moro, Daniele
  • Sckokai, Paolo
  • Veneziani, Mario

Abstract

This working paper provides a comparative analysis, among selected EU member states, of the investment demand of a sample of specialised field crop farms for farm buildings, machinery and equipment as determined by different types and levels of Common Agricultural Policy support. It allows for the existence of uncertainty in the price of output farmers receive and for both long- and short-run determinants of investment levels, as well as for the presence of irregularities in the cost adjustment function due to the existence of threshold-type behaviours. The empirical estimation reveals that three investment regimes are consistently identified in Germany and Hungary, across asset and support types, and in France for machinery and equipment. More traditional disinvestment-investment type behaviours characterise investment in farm building in France and the UK, across support types, and Italy for both asset classes under coupled payments. The long-run dynamic adjustment of capital stocks is consistently and significantly estimated to be towards a – mostly non-stationary – lower level of capitalisation of the farm analysed. By contrast, the expected largely positive short-run effects of an increase in output prices are often not significant. The effect of CAP support on both types of investment is positive, although seldom significant, while the proxy for uncertainty employed fails to be significant yet, in most cases, has the expected effect of reducing the investment levels.

Suggested Citation

  • Guastella, Giovanni & Moro, Daniele & Sckokai, Paolo & Veneziani, Mario, 2013. "Investment behaviour of EU arable crop farms in selected EU countries and the impact of policy reforms," Working papers 152083, Factor Markets, Centre for European Policy Studies.
  • Handle: RePEc:ags:famawp:152083
    DOI: 10.22004/ag.econ.152083
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    References listed on IDEAS

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    2. Xiaojuan Luo & Shuyi Feng & Hongbin Liu & Bo Zhao, 2019. "Large-Scale Grain Producers’ Application of Land Conservation Technologies in China: Correlation Effects and Determinants," Sustainability, MDPI, vol. 11(2), pages 1-17, January.
    3. Mathias Kloss & Thomas Kirschstein & Steffen Liebscher & Martin Petrick, 2019. "Robust Productivity Analysis: An application to German FADN data," Papers 1902.00678, arXiv.org, revised Feb 2019.
    4. Wawrzyniec Czubak & Krzysztof Piotr Pawłowski, 2020. "Sustainable Economic Development of Farms in Central and Eastern European Countries Driven by Pro-investment Mechanisms of the Common Agricultural Policy," Agriculture, MDPI, vol. 10(4), pages 1-19, March.
    5. Powell Mponela & Girma T. Kassie & Lulseged D. Tamene, 2018. "Simultaneous adoption of integrated soil fertility management technologies in the Chinyanja Triangle, Southern Africa," Natural Resources Forum, Blackwell Publishing, vol. 42(3), pages 172-184, August.

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