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Simulation Model Based On Iacs Data; Alternative Approach To Analyse Sectoral Income Risk In Agriculture

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  • ZGAJNAR, Jaka

Abstract

We develop a static simulation model to analyse income losses and income risks at aggregated agriculture sector level. Our empirical case study is based on farm level records for direct payments claims (IACS data) and covers the period 2010–2011. Using Monte Carlo simulations, we investigate the impact of different levels of risk on income trends. Results show that 80% of farms are extremely dependent on direct payments. Farm production types highly supported by direct payments consequentially fall into the low-risk group. Results show that a significant share of income loss at sector level is carried by small farms (by economic class). Average probability of larger losses at the sector level ranges between 2% and 64%. Our results also indicate that larger farms often have better risk-return ratios and thus face lower relative income risks.

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  • ZGAJNAR, Jaka, 2016. "Simulation Model Based On Iacs Data; Alternative Approach To Analyse Sectoral Income Risk In Agriculture," Review of Agricultural and Applied Economics (RAAE), Faculty of Economics and Management, Slovak Agricultural University in Nitra, vol. 19(1), pages 1-9, April.
    • Handle: RePEc:ags:roaaec:254151
    DOI: 10.22004/ag.econ.254151
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    References listed on IDEAS

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    1. Robert Finger & Nadja El Benni, 2014. "A Note on the Effects of the Income Stabilisation Tool on Income Inequality in Agriculture," Journal of Agricultural Economics, Wiley Blackwell, vol. 65(3), pages 739-745, September.
    2. Mary, Sebastien & Santini, Fabien & Boulanger, Pierre, 2013. "An Ex-Ante Assessment of CAP Income Stabilisation Payments using a Farm Household Model," 87th Annual Conference, April 8-10, 2013, Warwick University, Coventry, UK 158860, Agricultural Economics Society.
    3. Finger, Robert, 2012. "Biases in Farm-Level Yield Risk Analysis due to Data Aggregation," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 61(01), pages 1-14, February.
    4. Anton, Jesus, 2008. "Agricultural Policies and Risk Management: A Holistic Approach," 108th Seminar, February 8-9, 2008, Warsaw, Poland 48103, European Association of Agricultural Economists.
    5. Mary, Sebastien & Mishra, Ashok K. & Paloma, Sergio Gomez y, 2013. "An impact assessment of EU's CAP income stabilisation payments," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149691, Agricultural and Applied Economics Association.
    6. Robert Finger & Nadja El Benni, 2014. "Alternative Specifications of Reference Income Levels in the Income Stabilization Tool," Cooperative Management, in: Constantin Zopounidis & Nikos Kalogeras & Konstadinos Mattas & Gert Dijk & George Baourakis (ed.), Agricultural Cooperative Management and Policy, edition 127, chapter 0, pages 65-85, Springer.
    7. Finger, Robert, 2012. "How strong is the “natural hedge”? The effects of crop acreage and aggregation levels," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122538, European Association of Agricultural Economists.
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