Potential impacts of the Income Stabilisation Tool on farmers' income and crop diversity: a French case study

Impacts potentiels de l'outil de stabilisation des revenus sur les revenus des agriculteurs et la diversité des cultures: une étude de cas française

Kamel Louhichi and Daël Merisier

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Abstract: This paper analyses the potential impacts of a hypothetical implementation of the Income Stabilisation Tool in France for the field crops sector. The IST is a risk management tool proposed within the CAP 2014-2020 to support farmers facing a severe drop in their incomes. This analysis was conducted using a farm-level model relying on expected utility theory and based on positive mathematical programming with risk. The model was applied to a sample of 1375 field crop farms in metropolitan France derived from FADN data. Simulation results show that the uptake rate of the tool is relatively low, less than 37% in all scenarios. It strongly depends on the CAP public support, the loss threshold triggering entitlement to the aid and the amount of premium paid by farmers. The highest rates are observed in large farms and farms located in regions highly exposed to climatic risks. Model results also show that the IST boost adopters' income. However, its impacts on crop diversity, measured by Shannon index, are negatives.

Keywords: Agricultural risk management; Income Stabilisation Tool; Mutual Fund; Crop diversity; Farm-level Model; Common Agricultural Policy; France (search for similar items in EconPapers)
Date: 2023-08-29
New Economics Papers: this item is included in nep-agr, nep-env and nep-upt
Note: View the original document on HAL open archive server: https://hal.science/hal-04195630v1
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Published in XVII EAAE Congress - Agri-food systems in a changing world: connecting science and society, European Association of Agricultural Economists, Aug 2023, Rennes, France

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04195630

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