Browse by: "2006"
Index
Title Index
Year Index
This paper is part of the OECD project on decoupling and follows the analytical framework defined in OECD (2001). The main objective is to estimate the importance of the dynamic investment effects of area payments using farm level data from the Italian FADN survey. It investigates the investment response by crop producers under the assumption that they are risk averse, and there is uncertainty concerning prices. A dynamic econometric model is estimated. Investment is defined as current expenditure on machinery and buildings for crop production. This paper uses the same data as OECD (2002) and makes estimations and simulations in a way that can be compared with the results obtained in that paper.
The aim of the study is to measure the impact of the 1992 reform of the Common Agricultural Policy (CAP) on arable crop yields in the European Union (EU), and more specifically to quantify the impact that the introduction of compensatory area payments had on yields. The CAP reform in May 1992 consisted largely in reducing support prices and offsetting the ensuing loss of income with direct payments based on factors of production, i.e. acreage in the case of COP (cereal, oilseed and protein) crops.
All types of agricultural support measures are likely to have an impact on investment. This is particularly the case of the most coupled forms of support such as market price support. However, the dimension of the investment impacts may differ significantly across policy measures since they have different impacts on the farmer’s decision environment. For instance, they have different impact on effective incentive prices and different income transfer efficiency. Under these circumstances the investment effects can be very different, requiring a specific empirical analysis.
Earlier studies in the OECD project on decoupling estimated static models of crop production incorporating risk aversion, following the analytical framework in OECD (2001). In contrast, this paper studies primarily dynamic models of crop investment. The province of Manitoba is selected as an example of Canadian prairie crop production, and investment is defined as current expenditure on machinery and equipment for Manitoba crop production (the data are not crop specific). This is the first econometric study of dynamic crop investment decisions for Canada, and as far as can be ascertained this is the first econometric study for any country of dynamic crop investment under risk aversion. Econometric results are used to simulate impacts of agricultural programmes on crop investment.
This study aims to establish whether farmers respond to insurance subsidies by either augmenting yields (changing non-land inputs use) or by changing crop patterns, or both. It also aims to provide an evaluation of farmers’ relative risk aversion coefficients.
This paper provides a review of the literature relating to empirical studies of the acreage and/or production response to the direct payments made to US farmers of wheat, feed grains, cotton and rice under the Federal Agriculture Improvement and Reform Act of 1996 and related payments made under additional legislation during the period 1999-2002.