EU-wide individual Farm Model for CAP Analysis (IFM-CAP): Application to Crop Diversification Policy

This paper presents the first EU-wide individual farm level model (IFM-CAP) intending to assess the impacts of CAP towards 2020 on farm economic and environmental performances. IFM-CAP is a static positive programming model applied to each EU-FADN individual farm to guarantee the highest representativeness of the EU agricultural sector and to capture the full heterogeneity across EU farms in terms of policy representation and impacts. The model is used to assess the effects of the crop diversification measure. Results show that most farms choose to comply with the diversification measure owing to the sizable subsidy reduction imposed in case of non-compliance. However, the overall impact on farm income is rather limited: farm income decreases by less than 1% at EU level, and only 5% of the farm population will be negatively affected. Nevertheless, for a small number of farms the income effect could be more substantial (more than -10%).

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JEL Codes:
C55; Q12; Q18

 Record created 2017-04-01, last modified 2019-08-30

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