Budgetary Impacts of Adding Agricultural Risk Management Programmes to the CAP

Simone Pieralli, Ignacio Pérez Domínguez, Christian Elleby and Thomas Chatzopoulos

Journal of Agricultural Economics, 2021, vol. 72, issue 2, 370-387

Abstract: Volatile prices and income uncertainties are major issues for farmers, leading to a demand for policies that mitigate such risks. However, the budgetary consequences of risk management schemes are uncertain due to their dependence on market prices. Using an agricultural multi‐commodity market model, we evaluate the potential budgetary consequences of introducing two specific risk management schemes used in the United States into the European Union Common Agricultural Policy (CAP), namely the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programmes. Our analysis considers three sets of reference prices and stochastic uncertainty related to yields and macroeconomic conditions, resulting in a joint distribution of agricultural outputs and support payments. The results show that the payments from these two risk management schemes are sensitive to the reference prices triggering support and to the programme participation shares. In the most extreme stochastic simulations, support payments from the PLC programme reach €23 billion while support payments from the ARC programme reach €2.1 billion for the three crops considered (barley, wheat and maize).

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://doi.org/10.1111/1477-9552.12406

Related works:
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:bla:jageco:v:72:y:2021:i:2:p:370-387

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0021-857X

Access Statistics for this article

Journal of Agricultural Economics is currently edited by David Harvey

More articles in Journal of Agricultural Economics from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().