Evaluating the Effects of Decoupled Payments under Output and Price Uncertainty

Christina A. Kotakou and Stelios Katranidis

No 91753, 84th Annual Conference, March 29-31, 2010, Edinburgh, Scotland from Agricultural Economics Society

Abstract: This paper examines the effects of decoupling policies on Greek cotton production under the hypothesis that producers face uncertainty about output price and quantity. Using our estimation results we simulate the effects on cotton production under four alternative policy scenarios: the ‘Old’ CAP regime (i.e. the policy practiced until 2005), the Mid-Term Review regime, a fully decoupled policy regime and a free trade-no policy scenario. Our results indicate the decoupled payment will have two contradictious effects on risk aversion. Producers become less risk averse through the wealth effect but more risk averse because of the increased output variance. The overall result of these two effects depends on the degree of risk aversion by farmers. We found that when the degree of risk aversion is high the wealth effect is positive. However, in the case of low risk aversion and a wealth effect equal to zero the decoupled payments become production neutral.

Keywords: Agricultural; and; Food; Policy (search for similar items in EconPapers)
Pages: 20
Date: 2010-03-29
New Economics Papers: this item is included in nep-agr, nep-mac and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/91753/files/51Kotakou_katranidis.pdf (application/pdf)

Related works:
Working Paper: Evaluating the Effects of Decoupled Payments under Output and Price Uncertainty (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:aesc10:91753

DOI: 10.22004/ag.econ.91753

Access Statistics for this paper

More papers in 84th Annual Conference, March 29-31, 2010, Edinburgh, Scotland from Agricultural Economics Society Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().