IDEAS home Printed from https://ideas.repec.org/p/mas/dpaper/1802.html
   My bibliography  Save this paper

The Production Effects of Crop Diversification Requirements Under the European Union Greening Policy

Author

Listed:
  • Daniel Voica

    (School of Economics and Finance, Massey University)

  • Stefan Wimmer

    (School of Life Sciences Weihenstephan, Technical University of Munich, Freisling)

Abstract

This paper explores the potential production and land use effects of making subsidy payments subject to crop diversification. We first derive a theoretical model for a rational farmer who receives subsidies contingent on the degree of crop diversification. A state-contingent framework is used to show that crop diversification decisions are independent of risk preferences if farmers have access to off-farm opportunities, such as financial markets. Pricing equations for land allocation and output decisions are derived from the theoretical model and used in a Generalized Method of Moments framework to estimate parameters of interest. We use a panel of crop farms from France, Germany, Poland, and the UK obtained from the EU Farm Accounting Data Network (FADN).

Suggested Citation

  • Daniel Voica & Stefan Wimmer, 2018. "The Production Effects of Crop Diversification Requirements Under the European Union Greening Policy," Discussion Papers 1802, School of Economics and Finance, Massey University, New Zealand.
  • Handle: RePEc:mas:dpaper:1802
    as

    Download full text from publisher

    File URL: https://econfin.massey.ac.nz/school/publications/discuss/2018/DP1802.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jean‐Paul Chavas & Salvatore Di Falco, 2012. "On the Role of Risk Versus Economies of Scope in Farm Diversification With an Application to Ethiopian Farms," Journal of Agricultural Economics, Wiley Blackwell, vol. 63(1), pages 25-55, February.
    2. Chambers, Robert G. & Quiggin, John, 2009. "Separability of stochastic production decisions from producer risk preferences in the presence of financial markets," Journal of Mathematical Economics, Elsevier, vol. 45(11), pages 730-737, December.
    3. Robert G. Chambers & Daniel C. Voica, 2017. "“Decoupled” Farm Program Payments are Really Decoupled: The Theory," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(3), pages 773-782.
    4. Rulon D. Pope & Richard Prescott, 1980. "Diversification in Relation to Farm Size and Other Socioeconomic Characteristics," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(3), pages 554-559.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Voica, Daniel C. & Wimmer, Stefan G., 2018. "The Production Effects of Crop Diversification Requirements under the European Union Greening Policy," 2018 Annual Meeting, August 5-7, Washington, D.C. 273874, Agricultural and Applied Economics Association.
    2. Nicholas A. Lancaster & Ariana P. Torres, 2019. "Investigating the Drivers of Farm Diversification Among U.S. Fruit and Vegetable Operations," Sustainability, MDPI, vol. 11(12), pages 1-20, June.
    3. Tesfaye, Wondimagegn & Tirivayi, Nyasha, 2020. "Crop diversity, household welfare and consumption smoothing under risk: Evidence from rural Uganda," World Development, Elsevier, vol. 125(C).
    4. Christian Almer & Jeremy Laurent-Lucchetti & Manuel Oechslin, 2014. "Agricultural shocks and riots: A disaggregated analysis," Department of Economics Working Papers 24/14, University of Bath, Department of Economics.
    5. Poonam Rani & Ajeet Kumar Sahoo, 2023. "Assessment of Productivity and Crop Diversification Pattern in Punjab Agriculture," Arthaniti: Journal of Economic Theory and Practice, , vol. 22(2), pages 251-270, December.
    6. Clément, Rigal & Tuan, Duong & Cuong, Vo & Le Van, Bon & Trung, Hoang quôc & Long, Chau Thi Minh, 2023. "Transitioning from Monoculture to Mixed Cropping Systems: The Case of Coffee, Pepper, and Fruit Trees in Vietnam," Ecological Economics, Elsevier, vol. 214(C).
    7. Andrew W. Stevens & Jim Teal, 2024. "Diversification and resilience of firms in the agrifood supply chain," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(2), pages 739-778, March.
    8. Muhammad Amjed Iqbal & Muhammad Rizwan & Azhar Abbas & Muhammad Sohail Amjad Makhdum & Rakhshanda Kousar & Muhammad Nazam & Abdus Samie & Nasir Nadeem, 2021. "A Quest for Livelihood Sustainability? Patterns, Motives and Determinants of Non-Farm Income Diversification among Agricultural Households in Punjab, Pakistan," Sustainability, MDPI, vol. 13(16), pages 1-14, August.
    9. Weiss, Christoph R. & Thiele, Holger D., 2002. "Diversifikation und Wachstum landwirtschaftlicher Unternehmen," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 51(03), pages 1-8.
    10. Ricker-Gilbert, Jacob & Jones, Michael, 2015. "Does storage technology affect adoption of improved maize varieties in Africa? Insights from Malawi’s input subsidy program," Food Policy, Elsevier, vol. 50(C), pages 92-105.
    11. Singh, Amarendra Pratap & Narayanan, Krishnan, 2016. "How can weather affect crop area diversity? Panel data evidence from Andhra Pradesh, a rice growing state of India," Studies in Agricultural Economics, Research Institute for Agricultural Economics, vol. 118(2), pages 1-10, August.
    12. Miller, Matthew Edward, 2003. "An economic perspective on Iowa farm diversification in the twentieth century," ISU General Staff Papers 2003010108000018194, Iowa State University, Department of Economics.
    13. Wening Sarwosri, Arieska & Mußhoff, Oliver, 2019. "Can crop diversification of perennial crop by smallholder farmers explained by risk attitudes and time preferences?," EFForTS Discussion Paper Series 28, University of Goettingen, Collaborative Research Centre 990 "EFForTS, Ecological and Socioeconomic Functions of Tropical Lowland Rainforest Transformation Systems (Sumatra, Indonesia)".
    14. Singbo, Alphonse G. & Emvalomatis, Grigorios & Alfons, Oude Lansink, 2013. "Assessing the impact of crop specialization on farms’ performance in vegetables farming in Benin: a non-neutral stochastic frontier approach," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149172, Agricultural and Applied Economics Association.
    15. Kimhi, Ayal, 2009. "Heterogeneity, Specialization and Social Cohesion in Israeli Moshav Cooperatives," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 37(1), pages 1-13.
    16. Bekele Gebisa Etea & Deyi Zhou & Kidane Assefa Abebe & Dessalegn Anshiso Sedebo, 2020. "Is income diversification a means of survival or accumulation? Evidence from rural and semi-urban households in Ethiopia," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 22(6), pages 5751-5769, August.
    17. Ibirénoyé Romaric Sodjahin & Fabienne Femenia & Obafemi Philippe Koutchade & A. Carpentier, 2022. "On the economic value of the agronomic effects of crop diversification for farmers: estimation based on farm cost accounting data [Valeur économique des effets agronomiques de la diversification de," Working Papers hal-03639951, HAL.
    18. Sonka, Steven T. & Khoju, Madhab R., 1989. "Empirical Studies Of Firm Viability, Profitability, And Growth," 1989 Conference, January 7-10, Tucson, Arizona 260159, Regional Research Committe NC-181: Determinants of Farm Size and Structure.
    19. Schurle, Bryan W. & Williams, Jeffery R., 1982. "Application of Stochastic Dominance Criteria to Farm Data," 1982 Annual Meeting, August 1-4, Logan, Utah 279463, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    20. Mafoua, Edouard, 2002. "Economies Of Scope And Scale Of Multi-Product U.S. Cash Grain Farms: A Flexible Fixed-Cost Quadratic (Ffcq) Model Analysis," 2002 Annual meeting, July 28-31, Long Beach, CA 19734, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mas:dpaper:1802. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mark Woods (email available below). General contact details of provider: https://edirc.repec.org/data/cbmasnz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.