Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/179068 
Year of Publication: 
2016
Citation: 
[Journal:] Agricultural and Food Economics [ISSN:] 2193-7532 [Volume:] 4 [Issue:] 6 [Publisher:] Springer [Place:] Heidelberg [Year:] 2016 [Pages:] 1-17
Publisher: 
Springer, Heidelberg
Abstract: 
Common Agricultural Policy uses a large share of its budget to support and stabilise the income of EU farmers by means of direct payments (DP). This paper assesses how much and how DP reduce the variability of farm income over time. The analysis is developed on a constant sample of 2402 Italian farms during the decade 2003-2012. It considers both the whole sample and farms grouped according to: types of farming; economic size classes; relative importance of DP. Income variability is analysed by mean of variance decomposition by income components. Variability of farm income over time is high and most of it is coming from the revenuecomponent. The DP stabilise farm income and this is mainly because DP are lessvariable than the remaining part of income. Indeed, DP are found to play a very limited countercyclical role against fluctuations of the remaining part of farm income. Finally, DP are not targeted to those farms facing the highest level of income variability. These latter two results suggest that, while DP stabilise farm income, there is a potentially large room of manoeuvre for increasing the efficiency of DP as income stabilising tool.
Subjects: 
Farm income
Farm management
Common agricultural policy
Variance decomposition
Direct payments
JEL: 
Q12, Q18, G32
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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