Assessment of CAP reform post 2013 in the rural areas of Emilia-Romagna Region - PSTER SESSION - Second Conference of the Italian Association of Agricultural and Applied Economics

1. Assessment of CAP reform post 2013
in the rural areas of Emilia-Romagna Region
RESULTS OBTAINED AND
POLICY IMPLICATIONS
R. Gigante, F. Arfini, M. Donati – University of Parma, Department of Economics
n order to assess the CAP 2014-2020 reform
in Emilia-Romagna region have been used the
positive mathematical programming (PMP)
methodology included in the AGRISP
(Agricultural Regional Integrated Simulation
Package) model. The model used consider the
impact of Greening’s criteria, capping and the
regionalization scheme on land allocation in
different farm systems and the relative
economic effects.
INTRODUCTION
OBJECTIVE
STRUCTURE OF
THE MODEL
CONCLUSIONS
METHODOLOGY
AND DATA
Wheat -4,3%
Corn
-6,0%
Other cereals
+18,3%
Rice -3,7%
Soybean
-4,1%
Other oil seeds
-10,5%
Sugar beet
-1,2%
Tomato
-2,4%
Forage
-10,6%
Pasture
+3,6%
Other crops
-1,6%
Greening
surface
37.630 hectares
BASELINE GREEN
Variations
of land use
Changes in economics value by province and
altimetry level
BASELINE GREENING VARIATION
(€/Ha) (%)
REGION
GSP 3.276 3.033 -7.4%
- TOTAL VARIABLE COSTS 2.356 2.176 -7.7%
= GROSS MARGIN (1° level) 920 857 -6.9%
+ TOTAL PAYMENT 307 237.8 -22.5%
= GROSS MARGIN (2° level) 1.227 1.095 -10.8%
PLAIN
GSP 3.416 3.238 -5.2%
- TOTAL VARIABLE COSTS 2.494 2.354 -5.6%
= GROSS MARGIN (1° level) 922 884 -4.1%
+ TOTAL PAYMENT 339 237,8 -29.9%
= GROSS MARGIN (2° level) 1.261 1.122 -11.1%
HILLS
GSP 2.922 2.606 -10.8%
- TOTAL VARIABLE COSTS 2.051 1.801 -12.2%
= GROSS MARGIN (1° level) 871 804 -7.6%
+ TOTAL PAYMENT 246 237,8 -3.4%
= GROSS MARGIN (2° level) 1.117 1.042 -6.7%
MOUNTAIN
GSP 3.029 2.409 -20.5%
- TOTAL VARIABLE COSTS 1.989 1.646 -17.2%
= GROSS MARGIN (1° level) 1.041 763 -26.7%
+ TOTAL PAYMENT 186 237,8 27.6%
= GROSS MARGIN (2° level) 1.227 1.001 -18.4%
Changes in aids distribution at provincial
and altimetry level
The aim of this contribution is to provide a first evaluation of the impacts of the European Commission
proposals on homogeneous rural areas of Emilia-Romagna Regions organized by province and altimetry
level. Model used represent one of the possible application of the PMP across Europe. The model have
been designed to reproduce effects of regionalized single payment system, Greening measures, and the
new capping mechanism on farm behavior and farm economic performances. Work is based on the
European Commission draft, so have to be consider as a possibility for understanding the potential
consequences on farm system in the examined region. The simulations demonstrate a differential
capability of farms in reacting to new policy and market scenarios, and how reform affect productions
and economic levels of the investigated farms.
The PMP model provides an insight of the production decisions of entrepreneurs, not only with reference
to the observed situation (baseline), but also to the situation after reform, so as to compare the
strategic changes of the farmer. The model is formed by three main phases: i) extraction of information,
which is constituted by the data management of the two databases related to the sample of the selected
companies; ii) through the PMP are estimated the cost functions of the selected farms, once obtained,
there will be the calibration of the model compared to the observed reality and simulation; iii) Analysis
of results.
The one database composed by the land use (from AGREA database) and the profitability of single
processes (form FADN database) with the methodology of PMP, allows to analyze the impact of
agricultural policies at micro-level (for the purposes to define rural policies) and macro-level (for the
purposes to estimate changes in supply on a regional and /or national level). In the phase concerning
the reproduction of the effects of the agricultural policy measures at regional level, the relevant aspects
of the AGRISP model are therefore the aggregation of the cost functions into a single regional model,
and the construction of a suitable set of constraints able to correctly simulate the policies for the whole
region.
The integrate database
FADN
• Production
• Output prices
• Variable costs (crop
and livestock)
• Total variable costs per
farms
AGEA
• Farms distribution
• Use of the land
• Livestock density
• Payments per farms
Results are detailed at regional and provincial level, with a focus also on altitude level. In particular the following scenarios have
been identified:
1) Baseline: The base scenario on which the comparison is carried out is represented by the situation recorded in 2010,
obtained by updating the results with the market price variation of the year 2007.
2) Greening: This scenario foresees the full application of the CAP reform. All the constraints and the new policy type of aids
have been activated (new Basic Payment Scheme considering the distribution of aids on the all UAA, Greening scheme
considered as mandatory, and the new capping scheme).
esults produced by the model (assuming to maintain constant prices) show that the introduction of Greening practices combined with the
regionalized distribution of basic payments will lead to substantial reductions in terms of the GSP and farm income. The greater consequences will be the difficulties to cover, at
farm level, fixed cost for investment. The Greening component generate a double effect: a contraction of harvested surfaces and a strong reallocation in land use and resources
towards those production that has higher price. The extension of regionalized aids to almost all UAA, with a single payment level in all regional territories, complemented by the
reduction of the aids amount, will reduce the average aid per hectare for the areas like plain (where at present farmers are used to receive higher support) in favor of mountain
areas. Despite to the increment of direct payment for mountain areas these areas appears as the most affected by the reform.
POLICY IMPLICATION As formulated the new CAP offer less assurance to specific local and territorial farmers because delegate to single Member States the possibility to activate or
not specific aids as “less-favored areas”, or maintain coupled aid for “productions with a local relevance”. This demand a direct intervention by the Policy Maker of Member States in
order to activate specific and voluntary schemes. So if "the market" will be the new driver for production choices of farmers (whom can no longer focus on the maximization of aids),
the strategic choices of European agriculture should not ignore the need to protect and guarantee the subsistence of local farms or of an entire productive sectors that operate in
less favored areas. It will be necessary in all this cases to operate with a different logic: the lack of competitiveness of farms located in the regional mountain areas is due in most of
the cases to factors involving territorial characteristics and economic environment rather the competitiveness of the farm itself.