Title: Understanding the Determinants of Investment Reactions to Decoupling of the Common Agricultural Policy
Citation: LAND USE POLICY vol. 28 no. 3 p. 495-505
Publication Year: 2011
JRC N°: JRC57035
ISSN: 0264-8377
URI: www.elsevier.com/locate/landusepol
DOI: 10.1016/j.landusepol.2010.10.003
Type: Articles in periodicals and books
Abstract: The objective of this paper is to identify the determinants of the reaction of farm households to the decoupling of the Common Agricultural Policy (CAP), focusing, in particular, on farm investment behaviour. The paper analyses a sample of 248 farm-households located in 8 EU countries, using decision tree algorithms to explain stated reactions to decoupling in terms of change in on-farm investment. The factors emerging as determinants of an increase in on-farm investment as a reaction to decoupling are the existence of a successor, the farmer's age, farm size, and whether the head of the farm works part-time or full-time. Allowing for the use of country variables, these tend to account already for the factors listed above and become the main predictors, followed by labour endowment, specialisation and expectations. While the study confirms the relevance of the main determinants available from the literature, it also emphasises the articulation of the effects of farm head age and labour management on the reaction to decoupling. This hints at the need for further research into the way such factors combine in determining farm-household reactions to a changing market and policy context and support the usefulness of non-parametric statistics tools for analysis.
JRC Directorate:Growth and Innovation

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