IDEAS home Printed from https://ideas.repec.org/p/ags/eaa123/122532.html
   My bibliography  Save this paper

The effect of agricultural policy change on income risk in Swiss agriculture

Author

Listed:
  • El Benni, Nadja
  • Finger, Robert
  • Mann, Stefan

Abstract

The study examines the effect of agricultural policy reforms on income variability of Swiss farmers. The observed heterogeneity in income risks across farms and time is explained with farm and regional characteristics. FADN data are used to construct coefficients of variation of total household income and gross revenues at farm-level over the period 1992-2009. Applying linear mixed effect models the effects of off-farm income, direct payments, farm size, specialisation and liquidity on gross revenue and household income variability in three different production regions are measured. The switch from market-based support to direct payments decreased the variability of farm revenues and household income. Off-farm income has a positive and farm size a negative effect on revenue risk. The opposite is true for household income risk. Specialisation increases revenue and household income risk. Direct payments serve as insurance for farmers and make them more willing to take risk from agricultural production.

Suggested Citation

  • El Benni, Nadja & Finger, Robert & Mann, Stefan, 2012. "The effect of agricultural policy change on income risk in Swiss agriculture," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122532, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaa123:122532
    DOI: 10.22004/ag.econ.122532
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/122532/files/El_Benni.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.122532?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Felix Schläpfer & Michael Tucker & Irmi Seidl, 2002. "Returns from Hay Cultivation in Fertilized Low Diversity and Non-Fertilized High Diversity Grassland," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 21(1), pages 89-100, January.
    2. Finger, Robert & Lehmann, Niklaus, 2011. "Do Direct Payments Influence Farmers' Hail Insurance Decisions?," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114355, European Association of Agricultural Economists.
    3. Yee, Jet & Ahearn, Mary Clare & Huffman, Wallace, 2004. "Links among Farm Productivity, Off-Farm Work, and Farm Size in the Southeast," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 36(3), pages 591-603, December.
    4. Barry, Peter J. & Escalante, Cesar L. & Bard, Sharon K., 2000. "Economic Risk And The Structural Characteristics Of Farm Businesses," 2000 Annual meeting, July 30-August 2, Tampa, FL 21778, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Teresa Serra & David Zilberman & Barry K. Goodwin & Keijo Hyvonen, 2005. "Replacement of Agricultural Price Supports by Area Payments in the European Union and the Effects on Pesticide Use," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(4), pages 870-884.
    6. Cornelis Gardebroek & María Daniela Chavez & Alfons Oude Lansink, 2010. "Analysing Production Technology and Risk in Organic and Conventional Dutch Arable Farming using Panel Data," Journal of Agricultural Economics, Wiley Blackwell, vol. 61(1), pages 60-75, February.
    7. Blank, Steven C. & Erickson, Kenneth W., 2007. "Agricultural Household Hedging With Off-Farm Income," Western Economics Forum, Western Agricultural Economics Association, vol. 6(01), pages 1-13.
    8. David A. Hennessy & Bruce A. Babcock & Dermot J. Hayes, 1997. "Budgetary and Producer Welfare Effects of Revenue Insurance," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 1024-1034.
    9. Finger, Robert, 2010. "Evidence of slowing yield growth - The example of Swiss cereal yields," Food Policy, Elsevier, vol. 35(2), pages 175-182, April.
    10. Carlo Cafiero & Fabian Capitanio & Antonio Cioffi & Adele Coppola, 2007. "Risk and Crisis Management in the Reformed European Agricultural Policy," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 55(4), pages 419-441, December.
    11. El Benni, Nadja & Mann, Stefan & Lehmann, Bernard, 2011. "Distributional effects of direct payments in Switzerland," 122nd Seminar, February 17-18, 2011, Ancona, Italy 99368, European Association of Agricultural Economists.
    12. Robert Finger & Niklaus Lehmann, 2012. "The influence of direct payments on farmers’ hail insurance decisions," Agricultural Economics, International Association of Agricultural Economists, vol. 43(3), pages 343-354, May.
    13. Murat Isik, 2002. "Resource Management under Production and Output Price Uncertainty: Implications for Environmental Policy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 557-571.
    14. Sckokai, Paolo & Moro, Daniele, 2005. "Modelling the Impact of the CAP Reform on Farm Investments," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24468, European Association of Agricultural Economists.
    15. Tyner, Wallace E. & Jacquet, Florence & Gray, Allan W., 2005. "Farm Income Stabilization: A Central Goal for American and European Policies," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24683, European Association of Agricultural Economists.
    16. Stanley Thompson & P. Michael Schmitz & Nobuyuki Iwai & Barry Goodwin, 2004. "The real rate of protection: the income and insurance effects of agricultural policy," Applied Economics, Taylor & Francis Journals, vol. 36(16), pages 1851-1858.
    17. Thompson, Stanley R. & Gohout, Wolfgang, 2000. "Cap Reform, Wheat Price Instability And Producer Welfare," 2000 Annual meeting, July 30-August 2, Tampa, FL 21780, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    18. Calum G. Turvey, 1992. "Contingent Claim Pricing Models Implied by Agricultural Stabilization and Insurance Policies," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 40(2), pages 183-198, July.
    19. Robert Finger, 2008. "Impacts of Agricultural Policy Reforms on Crop Yields Incidences des réformes de la politique agricole sur les rendements des cultures Auswirkungen von Agrarpolitikreformen auf die Ernteerträge," EuroChoices, The Agricultural Economics Society, vol. 7(3), pages 24-25, December.
    20. Marra, Michele C. & Schurle, Bryan W., 1994. "Kansas Wheat Yield Risk Measures And Aggregation: A Meta- Analysis Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 19(01), pages 1-9, July.
    21. Barnett, Barry J. & Coble, Keith H., 2008. "Are Our Agricultural Risk Management Tools Adequate for a New Era?," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 24(01), pages 1-4.
    22. Finger, Robert, 2012. "Biases in Farm-Level Yield Risk Analysis due to Data Aggregation," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 61(1).
    23. Charles M. Beach & David Gray & Ross Finnie, 2006. "Long-run Inequality And Annual Instability Of Men's And Women's Earnings In Canada," Working Paper 1116, Economics Department, Queen's University.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lehmann, Niklaus & Finger, Robert, 2012. "Optimizing whole-farm management considering price and climate risks," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122533, European Association of Agricultural Economists.
    2. Blend Frangu & Jennie Sheerin Popp & Michael Thomsen & Arben Musliu, 2018. "Evaluating Greenhouse Tomato and Pepper Input Efficiency Use in Kosovo," Sustainability, MDPI, vol. 10(8), pages 1-14, August.
    3. MOHSEN, Adel Shakeeb & CHUA, Soo Y. & CHE SAB, Che Normee, 2016. "Determinants Of Agricultural Output In Syria," Review of Agricultural and Applied Economics (RAAE), Faculty of Economics and Management, Slovak Agricultural University in Nitra, vol. 19(01), pages 1-9, March.
    4. 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.
    5. Luigi Biagini & Simone Severini, 2021. "The role of Common Agricultural Policy (CAP) in enhancing and stabilising farm income: an analysis of income transfer efficiency and the Income Stabilisation Tool," Papers 2104.14188, arXiv.org.

    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. El Benni, Nadja & Finger, Robert, 2014. "Where is the risk? Price, yield and cost risk in Swiss crop production," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 95(3).
    2. Luigi Biagini & Simone Severini, 2021. "The role of Common Agricultural Policy (CAP) in enhancing and stabilising farm income: an analysis of income transfer efficiency and the Income Stabilisation Tool," Papers 2104.14188, arXiv.org.
    3. Ashok Mishra & Barry Goodwin, 2006. "Revenue insurance purchase decisions of farmers," Applied Economics, Taylor & Francis Journals, vol. 38(2), pages 149-159.
    4. Sauer, Johannes & Finger, Robert, 2014. "Climate Risk Management Strategies in Agriculture – The Case of Flood Risk," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 172679, Agricultural and Applied Economics Association.
    5. Dörschner, T. & Mußhoff, O., 2014. "Does the Risk Attitude Influence and Farmers’ Willingness to Participate in Agri-Environmental Measures? – A Normative Approach to Evaluate Ecosystem Services," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 49, March.
    6. 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.
    7. Dörschner, Till & Musshoff, Oliver, 2013. "Does the risk attitude influence the farmers' willingness to participate in agri-environmental measures? – A normative approach to evaluate ecosystem services," 53rd Annual Conference, Berlin, Germany, September 25-27, 2013 156112, German Association of Agricultural Economists (GEWISOLA).
    8. Schmitt, Jonas & Offermann, Frank & Söder, Mareike & Frühauf, Cathleen & Finger, Robert, 2022. "Extreme weather events cause significant crop yield losses at the farm level in German agriculture," Food Policy, Elsevier, vol. 112(C).
    9. Vigani, Mauro & Khafagy, Amr & Berry, Robert, 2024. "Public spending for agricultural risk management: Land use, regional welfare and intra-subsidy substitution," Food Policy, Elsevier, vol. 123(C).
    10. Ayenew, Habtamu Yesigat & Sauer, Johannes & Abate-Kassa, Getachew, 2016. "Cost of Risk Exposure, Farm Disinvestment and Adaptation to Climate Uncertainties: The Case of Arable Farms in the EU," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235595, Agricultural and Applied Economics Association.
    11. 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.
    12. Richards, Timothy J. & Manfredo, Mark R., 2003. "Infrequent Shocks and Rating Revenue Insurance: A Contingent Claims Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(2), pages 1-19, August.
    13. Yunqi Wang & Fuli Gao & Jiapeng Yang & Jianyun Zhao & Xiaoge Wang & Guoying Gao & Rui Zhang & Zhikuan Jia, 2018. "Spatio-Temporal Variation in Dryland Wheat Yield in Northern Chinese Areas: Relationship with Precipitation, Temperature and Evapotranspiration," Sustainability, MDPI, vol. 10(12), pages 1-12, November.
    14. Lim, Terence & Lo, Andrew W. & Merton, Robert C. & Scholes, Myron S., 2006. "The Derivatives Sourcebook," Foundations and Trends(R) in Finance, now publishers, vol. 1(5–6), pages 365-572, April.
    15. F. G. Santeramo & B. K. Goodwin & F. Adinolfi & F. Capitanio, 2016. "Farmer Participation, Entry and Exit Decisions in the Italian Crop Insurance Programme," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(3), pages 639-657, September.
    16. Calum G. Turvey & Jeffrey R. Stokes, 2008. "Market Structure and the Value of Agricultural Contingent Claims," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 56(1), pages 79-94, March.
    17. Zhu, Xueqin & Milán Demeter, Róbert, 2012. "Technical efficiency and productivity differentials of dairy farms in three EU countries: the role of CAP subsidies," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 13(01), pages 1-27.
    18. Sergei Schaub & Nadja El Benni, 2024. "How do price (risk) changes influence farmers’ preferences to reduce fertilizer application?," Agricultural Economics, International Association of Agricultural Economists, vol. 55(2), pages 365-383, March.
    19. Djanibekov, Utkur & Finger, Robert, 2018. "Agricultural risks and farm land consolidation process in transition countries: The case of cotton production in Uzbekistan," Agricultural Systems, Elsevier, vol. 164(C), pages 223-235.
    20. Castañeda-Vera, Alba & Garrido, Alberto, 2017. "Evaluation of risk management tools for stabilising farm income under CAP 2014-2020," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 17(01), June.

    More about this item

    Keywords

    Risk and Uncertainty;

    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:ags:eaa123:122532. 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: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/eaaeeea.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.