Between markets and policy Farm-household’s reaction to decoupling

1. Between markets and policy Farm-household’s reaction to decoupling Objective The main objective of this research is to evaluate ex-post the effects of 2003 CAP decoupling with a specific focus on farm-households (FH) investment behaviour. Table 1 – Correlation between the use of Single Farm Payment (SFP) and selected explanatory variables* Sample and Case Study Areas FH are ex-ante clustered according to their physical location (plain, hilly/mountainous), productions mix (predominantly crops, livestock, and orchard/vineyard/forest), and technology (conventional, organic). The analysis is based on a survey of 248 FH in Italy, Germany, Poland, Spain, Greece, the Netherlands, France and Hungary. Data analysis is based on descriptive statistics and the analysis of the correlation of main policy effects with selected explanatory variables. * + = positive significant correlation; - = negative significant correlation; no sign = no significant correlation; significance at 5%. Table1 confirms (i) the close linkage among SFP, labour and investment choices, and (ii) the importance of relative values of SFP (compared to revenue) on farm choices. Table2 confirms that the SFP tends to contribute to and is consistent with the general strategy of the farm, i.e. increasing investment in the case of farms that have already a positive attitude to investment and size-enlargement. Table 2 – Correlation between the stated effect of decoupling and selected explanatory variables * Where any change occurred, the impact of decoupling was highly differentiated. Differences in reaction are better explained by different individual FH characteristics, rather than by association with a specific production mix and/or technology. In the more efficient and expansion-oriented FH, decoupling is perceived as an opportunity for investment, while in small, poorer performing FH the SFP is viewed rather as an opportunity for extensification. Results A positive attitude with respect to investment is found. However, 55% of farmers interviewed stated they were indifferent to decoupling. Tables illustrate the relationships between the (i) use of Single Farm Payment (SFP) (Table 1) and (ii) stated effect of decoupling (Table 2) on the one side and selected variables on the other. A one-to-one correlation exercise between each explanatory variable and the dependent variable was applied. More Info Investment Behaviour in Conventional and Emerging Farming Systems under Different Policy Scenarios. JRC-IPTS report, EUR N. 23245 EN, 2008 http://ipts.jrc.ec.europa.eu/publications/pub.cfm?id=1557 Contact: Dr. Frank Sammeth and Dr. Sergio Gomez y Paloma European Commission • Joint Research Centre Institute for Prospective Technological Studies Tel. +34 954488358 • Fax +34 954488434 E-mail: frank.sammeth@ec.europa.eu