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

Sckokai, Paolo; Moro, Daniele

doi:10.1093/erae/jbp026

Cited by 114 publications

(75 citation statements)

References 31 publications

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“…There is also a significant number of studies that analyse various aspects of decoupled payments with a focus on European land markets. These studies are primarily focused on the influence of the decoupling reform on agricultural production (Rude 2008), investment decisions of farmers (Sckokai and Moro 2009) and income distributional aspects (Latruffe and Mouël 2009). Furthermore, there is some empirical evidence suggesting that decoupled income support have a significant positive influence on the rental price of land (Brady et al 2009).…”

Section: Previous Studies and Theoretical Frameworkmentioning

confidence: 99%

Location determinants of agricultural land prices

Nilsson

Johansson

2013

Jahrb Reg wiss

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This paper analyses determinants of agricultural land prices in Sweden with a particular focus on location-specific factors. An asset-pricing model is used to decompose agricultural land prices into expected returns from land in its current agricultural use and expected returns from its potential use. The model is estimated in a cross regional context where explanatory factors relate to regional variations in land productivity, agricultural support payments and urbanising influences. Results indicate that both agricultural and non-agricultural factors are influential determinants to the price of agricultural land. Estimating marginal effects across the distribution of the dependent variable, non-agricultural factors are shown to be more important in regions that have high agricultural land prices, whereas, income support to farmers in the form of the decoupled single farm payment is shown to be most influential in regions with low agricultural land prices.Keywords Land price · Asset pricing · Single farm payment · Quantile regression

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Section: Previous Studies and Theoretical Frameworkmentioning

confidence: 99%

Location determinants of agricultural land prices

Nilsson

Johansson

2013

Jahrb Reg wiss

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“…Farmers may react to price volatility by reducing output supply and investments in productive inputs (Seal and Shonkwiler, 1987;Rezitis and Stavropoulos, 2009;Sckokai and Moro, 2009;Piot-Lepetit, 2011;Taya, 2012). Furthermore, agricultural input price volatility exposes the downstream sector of food supply chains to sourcing uncertainties, forcing food and agricultural companies to alter their sourcing strategies as a coping mechanism .…”

Section: Problem Statementmentioning

confidence: 99%

“…Typical manifestations of such perception are the numerous studies that investigate the effects of farm price volatility on farm supply response. The papers by Seal and Shonkwiler (1987), Rezitis and Stavropoulos (2009a), Rezitis and Stavropoulos (2009b), Sckokai and Moro (2009), Rezitis and Stavropoulos (2010a), Rezitis and Stavropoulos (2010b), Piot-Lepetit (2011), Taya (2012, Rezitis and Stavropoulos (2011b), Rezitis and Stavropoulos (2012) are some of the studies that explored this issue. Some insights can be drawn from these papers on volatility transmissions from the farm stage to the downstream stage of the chain, but these insights are mere implications 1 .…”

Section: Price Volatility Transmission In Food Supply Chainsmentioning

confidence: 99%

“…Market measures under the CAP such as border protection through import barriers, export subsidies, production quotas and intervention buying have traditionally kept EU agricultural prices at high and stable levels (Bardaji et al, 2011;. The mounting pressure of such market interventions on the EU budget and the increasing tensions with the EU's trading partners have led to the CAP reforms in 1992 and 2003 which gradually shifted the policy from market interventions to decoupled single farm payments and opened up the EU to international markets (Sckokai and Moro, 2009;. However, the Single Farm Payment Scheme, even though proven to be a powerful income stabilization tool (Bardaji et al, 2011), does not reduce the price risk faced by farmers .…”

Section: Introductionmentioning

confidence: 99%

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The transmission and management of price volatility in food supply chains

Assefa¹

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The 2006-2011 period has been marked by increased volatility in food an agricultural commodity prices at a global level. In the EU, the continuous liberalization of agricultural markets under the Common Agricultural Policy has led to the exposure of EU agricultural to increasing market price volatility. This thesis has investigated the transmission and management of price volatility in EU food supply chains. The transmission of price volatility in various food supply chains is first investigated through a literature review followed by an empirical analysis of price volatility transmission in the case of the German fresh pork supply chain. The effect of market power was also taken into account in the latter empirical analysis. Next, the management of price volatility was investigated through interviews conducted with actors of selected EU food supply chains. This was followed by the analysis of the effectiveness of selected price volatility management strategies. Lastly, in light of the policy support for agricultural insurance within the Common agricultural policy, premium rates of an agricultural revenue insurance contract were calculated for the Dutch ware potato sector.One of the gaps identified in the reviewed literature is the lack of attention given to the effects of contextual factors on price volatility transmissions in food supply chains. Contextual factors include market power in the chain and pricing strategies (e.g. contracts) by chain actors. Results of the price volatility transmission analysis conducted in this thesis in the case of the German pork chain show that retail market power limited both the transmission of price levels and price volatility. This thesis shows that price volatility is perceived as risky by all actors in the food supply chain. Deviations of prices by more than 10 to 15 % from expected levels were perceived as price volatility by a majority of the chain actors. Results further show that price volatility management strategies in EU food chains are diverse and well beyond traditional instruments such as futures and forward contracts. Contrary to expectations, price fixing contracts were not found to be desirable by interviewed chain actors. This thesis also found that the effectiveness of contracts in reducing price volatility depended on how the contract price was set.Results of this thesis further show that premium rates of a revenue insurance contract for the Dutch ware potato sector across categories of farms. The average premium rates calculated were 32.1%, 22.2%, 33.1% and 24.0% on guaranteed revenue per hectare for the high expected yield, low expected yield, high yield variance to expected yield ratio and low yield variance to expected yield ratio categories of farm, respectively. The difference in premium rates across categories of farms implies that charging the same average premium rate to all Dutch ware potato farms can lead to adverse selection.

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“…It is recognized that direct payments foster investment through income support, however, several studies (Gallerani, 2008;Sckokai, 2009;Viaggi, 2010) highlighted that prices significantly affect farm investments, whereas direct payments have smaller impact.…”

Section: Introductionmentioning

confidence: 99%

The evaluation of the impact of support on Lithuanian farms investments

Kriščiukaitienė

Namiotko

Kripaitis

2015

Management Theory and Studies for Rural Business and Infrastructure Development

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The paper aims to evaluate the impact of support on Lithuanian farms investments. Logistic regression, also called a logit model, was used to determine the probability of investing. The regression was estimated on cross-sectional data set of Lithuanian family farms participating in the Farm Accountancy Data Network. It was specified for investments in machinery and equipment. The research showed that support encourages investments in machinery and equipment. However, scenario analysis revealed that the impact of different support scenarios on the probability of investing is relatively small. It was also confirmed the importance of farm characteristics in making investments.

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

Cited by 114 publications

References 31 publications

Location determinants of agricultural land prices

Location determinants of agricultural land prices

The transmission and management of price volatility in food supply chains

The evaluation of the impact of support on Lithuanian farms investments

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