Title: Farm Investment Behaviour under the CAP Reform Process
Publisher: Publications Office of the European Union
Publication Year: 2011
JRC N°: JRC62770
ISBN: 978-92-79-19424-5
ISSN: 1018-5593
Other Identifiers: EUR 24730 EN
URI: http://ipts.jrc.ec.europa.eu/publications/pub.cfm?id=4239
DOI: 10.2791/53859
Type: EUR - Scientific and Technical Research Reports
Abstract: The results of the study, based on survey analysis as well as on modelling of farm behaviour, can be summarised in four main outcomes: Similar to the results of the first Investment study carried out in 2006 and published in 2008 (Gallerani. et. al.), in the context of the present study (carried out in 2009) for about half of the farms decoupling did not result in any change. Among those farms showing some reaction, one of the more prominent effects is the increase in on-farm investment. The price trends in 2007/2008 and the ongoing economic and financial crisis have partially reshaped access to credit, perceptions of objectives, constraints and expectations. In particular, farms have witnessed a major reduction in access to credit, particularly the share of farms using short term credit, which dropped from more than 40% in 2006 to about 7% in 2009. The change in economic conditions has increased this role of the CAP, and the importance of CAP payments in covering current expenditures has become more evident. Prices confirm their role as the key variable for investment choices. The results of the modelling exercise confirm that farm and farm-household income and investment choices depend more on the price level than on the level of payment received. Altogether, the combined effect of the recent policy reform (decoupling and first pillar payment reductions), as well as price and cost developments tend to reinforce the role of policy for the economic and social sustainability of farming. Notably, policy areas such as income support, investment and credit management, market access, as well as transitory and cross-policy mechanisms, appear to be of particular importance. Uncertainty (and related risk-management instruments) seems to play an increasing role in the investment decision process.
JRC Directorate:Growth and Innovation

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