IDEAS home Printed from https://ideas.repec.org/p/ags/iaae18/277534.html
   My bibliography  Save this paper

Choice of product mix and agricultural subsidies - evidence from a quasi-experiment in Agenda 2000 CAP reform

Author

Listed:
  • Simola, A.

Abstract

We study the effect of the Agenda 2000 CAP reform on the choice of crop mix with a differences-in-differences regression model. In our analysis, we exploit a quasi-experimental setting between Finnish agricultural subsidy regions that emerged in the reform. The variation catches the causal effect between coupled subsidies and planting decision. We found that changes in payments to individual crops explain changes in crop mixes. However, the observed causal effect does not fully conform to theoretical predictions. Additionally, the effect is small and is easily confounded by small changes in natural conditions. The results indicate that changes even in coupled subsidies may only have small impact on production decisions as yet unexplored factors prevent the incidence from being perfect. Acknowledgement : I want to thank my supervisors Dr. Elias Eini and Reaserch Director Marita Laukkanen for many useful advices on this paper.

Suggested Citation

  • Simola, A., 2018. "Choice of product mix and agricultural subsidies - evidence from a quasi-experiment in Agenda 2000 CAP reform," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277534, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae18:277534
    DOI: 10.22004/ag.econ.277534
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/277534/files/1773.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.277534?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-793, September.
    2. Oecd, 2006. "A Review of Empirical Studies of the Acreage and Production Response to US Production Flexibility Contract Payments under the Fair Act and Related Payments under Supplementary Legislation," OECD Papers, OECD Publishing, vol. 5(11), pages 1-32.
    3. Phoebe Koundouri & Marita Laukkanen & Sami Myyrä & Céline Nauges, 2009. "The effects of EU agricultural policy changes on farmers' risk attitudes," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 36(1), pages 53-77, March.
    4. Bhaskar, Arathi & Beghin, John C., 2009. "How Coupled Are Decoupled Farm Payments? A Review of the Evidence," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(1), pages 1-24, April.
    5. Andrius Kazukauskas & Carol Newman & Daragh Clancy & Johannes Sauer, 2013. "Disinvestment, Farm Size, and Gradual Farm Exit: The Impact of Subsidy Decoupling in a European Context," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(5), pages 1068-1087.
    6. Fabienne Femenia & Alexandre Gohin & Alain Carpentier, 2010. "The Decoupling of Farm Programs: Revisiting the Wealth Effect," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(3), pages 836-848.
    7. Just, David R., 2011. "Calibrating the wealth effects of decoupled payments: Does decreasing absolute risk aversion matter?," Journal of Econometrics, Elsevier, vol. 162(1), pages 25-34, May.
    8. 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.
    9. Jeremy G. Weber & Nigel Key, 2012. "How much Do Decoupled Payments Affect Production? An Instrumental Variable Approach with Panel Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(1), pages 52-66.
    10. David R. Just & Jaclyn D. Kropp, 2013. "Production Incentives from Static Decoupling: Land Use Exclusion Restrictions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(5), pages 1049-1067.
    11. Oecd, 2006. "Decoupling: A Conceptual Overview," OECD Papers, OECD Publishing, vol. 5(11), pages 1-31.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wagener, Andreas & Zenker, Juliane, 2018. "Decoupled but not neutral: The effects of stochastic transfers on investment and incomes in rural Thailand," TVSEP Working Papers wp-008, Leibniz Universitaet Hannover, Institute of Development and Agricultural Economics, Project TVSEP.
    2. Edward Knapp & Jason Loughrey, 2017. "The single farm payment and income risk in Irish farms 2005–2013," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 5(1), pages 1-15, December.
    3. Andreas Wagener & Juliane Zenker, 2021. "Decoupled but Not Neutral: The Effects of Counter‐Cyclical Cash Transfers on Investment and Incomes in Rural Thailand†," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(5), pages 1637-1660, October.
    4. Kehinde Oluseyi Olagunju & Myles Patton & Siyi Feng, 2020. "Estimating the Impact of Decoupled Payments on Farm Production in Northern Ireland: An Instrumental Variable Fixed Effect Approach," Sustainability, MDPI, vol. 12(8), pages 1-17, April.
    5. Urban, Kirsten & Jensen, Hans Grinsted & Brockmeier, Martina, 2012. "How Decoupled is the SFP in GTAP: Using a Sensitivity Analysis to Uncover the Degree of Coupling," Conference papers 332173, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Voica, Daniel C., 2014. "Are Subsidies Decoupled from Production in the Presence of Incomplete Financial Markets?," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169788, Agricultural and Applied Economics Association.
    7. Pierre Boulanger & Kirsten Boysen-Urban & George Philippidis, 2021. "European Union Agricultural Support ‘Coupling’ in Simulation Modelling: Measuring the Sustainability Impacts," Sustainability, MDPI, vol. 13(6), pages 1-17, March.
    8. Robert G. Chambers & Daniel C. Voica, 2017. "“Decoupled” Farm Program Payments are Really Decoupled: The Theory," American Journal of Agricultural Economics, John Wiley & Sons, vol. 99(3), pages 773-782, April.
    9. Moro, Daniele & Sckokai, Paolo, 2013. "The impact of decoupled payments on farm choices: Conceptual and methodological challenges," Food Policy, Elsevier, vol. 41(C), pages 28-38.
    10. 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.
    11. Andrius Kazukauskas & Carol Newman & Johannes Sauer, 2014. "The impact of decoupled subsidies on productivity in agriculture: a cross-country analysis using microdata," Agricultural Economics, International Association of Agricultural Economists, vol. 45(3), pages 327-336, May.
    12. Barrett E. Kirwan & Michael J. Roberts, 2016. "Who Really Benefits from Agricultural Subsidies? Evidence from Field-level Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(4), pages 1095-1113.
    13. Antti Simola, 2018. "Government payments, market profits and structural change in agriculture," Journal of Evolutionary Economics, Springer, vol. 28(4), pages 837-857, September.
    14. Robert Finger & Niklaus Lehmann, 2012. "The influence of direct payments on farmers’ hail insurance decisions," Agricultural Economics, International Association of Agricultural Economists, vol. 43(3), pages 343-354, May.
    15. Martina Bozzola & Robert Finger, 2021. "Stability of risk attitude, agricultural policies and production shocks: evidence from Italy," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 48(3), pages 477-501.
    16. Devadoss, Stephen & Gibson, Mark J. & Luckstead, Jeff, 2016. "The Impact of Agricultural Subsidies on the Corn Market with Farm Heterogeneity and Endogenous Entry and Exit," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 41(3), pages 1-20, September.
    17. Britz, Wolfgang & Gocht, Alexander & Domínguez, Ignacio Pérez & Jansson, Torbjörn & Grosche, Stephanie-Carolin & Zhao, Na, 2012. "EU-Wide (Regional and Farm Level) Effects of Premium Decoupling and Harmonisation Following the Health Check Reform," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 61(1).
    18. Britz, Wolfgang & Gocht, Alexander & Domínguez, Ignacio Pérez & Jansson, Torbjörn & Grosche, Stephanie-Carolin & Zhao, Na, 2012. "EU-Wide (Regional and Farm Level) Effects of Premium Decoupling and Harmonisation Following the Health Check Reform," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 61(01), pages 1-13, February.
    19. O’Toole, Conor & Hennessy, Thia, 2015. "Do decoupled payments affect investment financing constraints? Evidence from Irish agriculture," Food Policy, Elsevier, vol. 56(C), pages 67-75.
    20. Mitchell, Paul D. & Rejesus, Roderick M. & Coble, Keith H. & Knight, Thomas O., 2011. "Analyzing Farmer Participation Intentions and Enrollment Rates for the Average Crop Revenue Election (ACRE) Program," Staff Paper Series 560, University of Wisconsin, Agricultural and Applied Economics.

    More about this item

    Keywords

    Agricultural and Food Policy;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:iaae18:277534. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/iaaeeea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.