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The impact of the 2013 Common Agricultural Policy reform on farmer's investment decisions: an ex-ante evaluation

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Listed:
  • Marconi, V.
  • Raggi, M.
  • Viaggi, D.
  • Lefebvre, M.
  • Gomez y Paloma, Sergio

Abstract

The research question addressed in this study is the impact of the CAP 2013 reform and alternative CAP scenarios on farm investment behaviour and economic performances in different farming systems. An ex-ante analysis of the farmers’ response to different policy scenarios is performed simulating some of the main changes introduced by the reform in both CAP pillars, accounting for regional variations across Europe. The methodology consist in the implementation of a farm-level mathematical programming model. The model is cast as an integer dynamic linear programming model based on the model developed by Viaggi et al. (2010) using GAMS software. The models are calibrated using a set of real farms data and accouting for farmers stated intentions collected through survey (Lefebvre, 2014). In this paper we present the model structure, the policy scenario and the results of the simulations carried out on 50 models, each corresponding to a surveyed farm.

Suggested Citation

  • Marconi, V. & Raggi, M. & Viaggi, D. & Lefebvre, M. & Gomez y Paloma, Sergio, 2015. "The impact of the 2013 Common Agricultural Policy reform on farmer's investment decisions: an ex-ante evaluation," 2015 Conference, August 9-14, 2015, Milan, Italy 212225, International Association of Agricultural Economists.
  • Handle: RePEc:ags:iaae15:212225
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    References listed on IDEAS

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    1. Laure Latruffe & Sophia Davidova & Elodie Douarin & Matthew Gorton, 2008. "Farm expansion in Lithuania after accession to the EU: The role of CAP payments in alleviating potential credit constraints," Working Papers SMART - LERECO 08-06, INRA UMR SMART-LERECO.
    2. Bojnec, Stefan & Latruffe, Laure, 2007. "Investment of Slovenian farms in the transition context," 104th Seminar, September 5-8, 2007, Budapest, Hungary 7827, European Association of Agricultural Economists.
    3. Dries, Liesbeth & Swinnen, Johan F.M., 2010. "The impact of interfirm relationships on investment: Evidence from the Polish dairy sector," Food Policy, Elsevier, vol. 35(2), pages 121-129, April.
    4. Ji, Yueqing & Yu, Xiaohua & Zhong, Funing, 2012. "Machinery investment decision and off-farm employment in rural China," China Economic Review, Elsevier, vol. 23(1), pages 71-80.
    5. Chantal Le Mouel, 2004. "Impacts of alternative agricultural income support schemes on multiple policy goals," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 31(2), pages 125-148, June.
    6. 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.
    7. Conor M. O'Toole & Carol Newman & Thia Hennessy, 2014. "Financing Constraints and Agricultural Investment: Effects of the Irish Financial Crisis," Journal of Agricultural Economics, Wiley Blackwell, vol. 65(1), pages 152-176, January.
    8. Viaggi, Davide & Raggi, Meri & Gomez y Paloma, Sergio, 2011. "Farm-household investment behaviour and the CAP decoupling: Methodological issues in assessing policy impacts," Journal of Policy Modeling, Elsevier, vol. 33(1), pages 127-145, January.
    9. Cardillo, Concetta & Cimino, Orlando & Henke, Roberto & Vanni, Francesco, 2012. "Delivering public goods in agriculture: the cost of green payments for Italian farms," 126th Seminar, June 27-29, 2012, Capri, Italy 126139, European Association of Agricultural Economists.
    10. Curtiss, Jarmila & Latruffe, Laure & Medonos, Tomas & Ratinger, Tomas, 2007. "Investment Activity and Ownership Structure of Czech Corporate Farms," 104th Seminar, September 5-8, 2007, Budapest, Hungary 7826, European Association of Agricultural Economists.
    11. Vercammen, James, 2003. "A Stochastic Dynamic Programming Model Of Direct Subsidy Payments And Agricultural Investment," Working Papers 15847, University of British Columbia, Food and Resource Economics.
    12. Simone Severini & Antonella Tantari, 2013. "The impact of agricultural policy on farm income concentration: the case of regional implementation of the CAP direct payments in Italy," Agricultural Economics, International Association of Agricultural Economists, vol. 44(3), pages 275-286, May.
    13. Viaggi, Davide & Raggi, Meri & Gomez y Paloma, Sergio, 2010. "An integer programming dynamic farm-household model to evaluate the impact of agricultural policy reforms on farm investment behaviour," European Journal of Operational Research, Elsevier, vol. 207(2), pages 1130-1139, December.
    14. Silke Hüttel & Oliver Mußhoff & Martin Odening, 2010. "Investment reluctance: irreversibility or imperfect capital markets?," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 37(1), pages 51-76, March.
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    More about this item

    Keywords

    linear programming; CAP reform; investment decisions; ex-ante analysis; Agricultural and Food Policy; C10; Q18;

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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