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European Review of Agricultural Economics Advance Access originally published online on November 5, 2009
European Review of Agricultural Economics 2009 36(3):395-423; doi:10.1093/erae/jbp026
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© Oxford University Press and Foundation for the European Review of Agricultural Economics 2009; all rights reserved. For permissions, please email journals.permissions@oxfordjournals.org

Modelling the impact of the CAP Single Farm Payment on farm investment and output

Paolo Sckokai and Daniele Moro

Università Cattolica, Piacenza, Italy

Corresponding author: Daniele Moro, Istituto di Economia Agro-alimentare, Università Cattolica, Via Emilia Parmense, 84, 29100 Piacenza, Italy. E-mail: daniele.moro{at}unicatt.it

Received February 2008; final version received August 2009

This paper analyses the impact of the Common Agricultural Policy arable crop regime on farm investment and output, introducing explicitly farmers’ risk attitudes into a dynamic dual model of farm decision-making. Estimation and simulation results are based on a Farm Accounting Data Network sample of Italian arable farms. The main finding is that an increase in intervention price would significantly affect farm investment, mainly through reduced price volatility, while policy changes not affecting price uncertainty, like an increase in the Single Farm Payment, would have a much smaller impact.

Keywords: farm investment, Common Agricultural Policy, Single Farm Payment, decoupling, uncertainty

JEL classification: Q12, Q18


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