EU income stabilization tool: potential impacts, financial sustainability and farmer’s risk aversion

Simone Severini (), Cinzia Zinnanti (), Valeria Borsellino () and Emanuele Schimmenti ()
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Simone Severini: Università degli Studi della Tuscia
Cinzia Zinnanti: Università degli Studi della Tuscia
Valeria Borsellino: Università degli Studi di Palermo
Emanuele Schimmenti: Università degli Studi di Palermo

Agricultural and Food Economics, 2021, vol. 9, issue 1, 1-21

Abstract: Abstract The Income Stabilization Tool, a risk management scheme introduced within the Common Agricultural Policy (CAP) 2014–2020, could help European Union farmers manage the income risks they face. This study assesses the potential impact of implementing this tool through the maximum level of contribution to the fund which determines an indifference to participate in the fund and its financial sustainability. The study relies on an expected utility approach and assesses the variability of loss ratios over time using a sample of Italian hazelnut farms as a case study. The participation depends on the level of farmers' contributions and their degree of risk aversion. However, the CAP public support makes the scheme financially sustainable.

Keywords: Expected utility; Gross margin; Mutual Fund; Risk management (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (9)

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DOI: 10.1186/s40100-021-00205-4

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