The Role of the Common Agricultural Policy in Enhancing Farm Income: A Dynamic Panel Analysis Accounting for Farm Size in Italy |
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| Authors: | Luigi Biagini Federico Antonioli Simone Severini |
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| Institution: | Luigi Biagini is a PhD student at the Department of Economics, Engineering, Society and Business (DEIM), Università della Tuscia, Italy. Federico Antonioli is at the Department of Economics and Management (SEA), Università di Parma, Italy. At the time of writing, he was at the Department of Agricultural and Forestry Sciences (DAFNE), Università della Tuscia, Italy. Simone Severini is at the Department of Agricultural and Forestry Sciences (DAFNE), Università della Tuscia, Italy. E-mail severini@unitus.it for correspondence. We thank David Harvey and two anonymous referees for valuable comments and suggestions on earlier drafts, as well as Mauro Vigani (CCRI), Steve Bond (University of Oxford), Alberto Bisin (New York University) and Alessandro di Nola (University of Konstanz) for valuable suggestions provided at the outset of the analysis. We are grateful to the CREA-PB (Rome, Italy) for providing access to the FADN dataset. Financial assistance from the MIUR (Law 232/2016, ‘Department of excellence’ granted to the DAFNE) is gratefully acknowledged. The usual disclaimer applies. |
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| Abstract: | As a multi-objective policy, the EU Common Agricultural Policy continues to secure significant income support for farmers as one of the nine specific objectives. We estimate the income transfer efficiency of a broad set of pivotal policy measures, focusing on the effects of farm structure on income transfer efficiency. We use dynamic modelling, based on a micro-data panel of Italian farms for the period 2008–2014, allowing for endogeneity, simultaneity bias, and omitted variables. In line with previous studies and economic expectations, we find that decoupled direct payments provide the highest contribution to agricultural incomes, followed by agri-environmental payments and on-farm investment subsidies. Coupled payments have no significant impacts on farmers’ income. Generally, for all analysed Common Agricultural Policy measures, large farms benefit from greater transfer efficiency levels compared with medium and small farms. These differences among instruments and across farms suggest that policy-participation costs may play a pivotal role, together with the economic structure of farms, in determining the income transfer efficiency of CAP policies. |
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| Keywords: | Dynamic panel EU Common Agricultural Policy FADN farm income support farm size income transfer efficiency Italy system-GMM |
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