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Reforming the Common Agricultural Policy: Decoupling Agricultural Payments from Production and Promoting the Environment

Esther Boere and Gerrit van Kooten

No 2015-01, Working Papers from University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group

Abstract: In this paper, we analyze the potential impact on producers’ land-use decisions in moving from support payments based on entitlements to a single farm payment (SFP). Further, we then consider a single farm payment with a greening component as part of the 2013 CAP reform. Using data for representative crop farms of different sizes in the Netherlands, we develop a farm-level crop allocation model that is calibrated using positive mathematical programming. We use a two-step calibration method to determine a nonlinear cost function and farm-specific risk aversion coefficients. Not unexpectedly, we find that the 2013 CAP reforms will cause farmers to shift away from crops previously eligible for payments, with the initial shift under the SFP enhanced by the move towards SFP combined with green payment.

Keywords: Agricultural policy and CAP reform; mathematical programming; agricultural business risk management (search for similar items in EconPapers)
JEL-codes: G22 Q14 Q17 Q18 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2015-03
New Economics Papers: this item is included in nep-agr
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Citations: View citations in EconPapers (2) Track citations by RSS feed

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Working Paper: Reforming the Common Agricultural Policy: Decoupling Agricultural Payments from Production and Promoting the Environment (2015) Downloads
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