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Feasibility of the Income Stabilisation Tool in Finland

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  • Liesivaara, Petri
  • Myyra, Sami
  • Jaakkola, Antti

Abstract

Whole-farm income insurances are promoted in the new post-2013 Common Agricultural Policy (CAP). The current Crop Damage Compensation (CDC) scheme in Finland covers crop failure for farmers who have suffered losses and applied for the payments. This paper analyses the use of the Income Stabilisation Tool (IST) and compares it to the current CDC scheme in Finland. The Finnish Farm Accountancy Data Network (FADN) is used to simulate the costs of IST compensation payments. Special attention is paid to pig farms and their possibilities to manipulate the IST. Results show that the IST is triggered with a high frequency on Finnish farms. The IST would be more costly than the current CDC programme. The results also suggest that the IST would act as an income transfer policy if farmers could influence their annual income. However, the efficiency of the IST as an income transfer policy is questionable due to its large transaction cost.

Suggested Citation

  • Liesivaara, Petri & Myyra, Sami & Jaakkola, Antti, 2012. "Feasibility of the Income Stabilisation Tool in Finland," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122537, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaa123:122537
    DOI: 10.22004/ag.econ.122537
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    References listed on IDEAS

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    1. Michael J. Roberts & Nigel Key & Erik O'Donoghue, 2006. "Estimating the Extent of Moral Hazard in Crop Insurance Using Administrative Data," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(3), pages 381-390.
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    5. Kimura, Shingo & Anton, Jesus, 2011. "Farm Income Stabilization and Risk Management: Some Lessons from AgriStability Program in Canada," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114755, European Association of Agricultural Economists.
    6. Brandon Schaufele & James R. Unterschultz & Tomas Nilsson, 2010. "AgriStability with Catastrophic Price Risk for Cow‐Calf Producers," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 58(3), pages 361-380, September.
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    8. Myyra, Sami & Pietola, Kyosti, 2011. "Testing for Moral Hazard and Ranking Farms by Their Inclination to Collect Crop Damage Compensations," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114632, European Association of Agricultural Economists.
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    Cited by:

    1. Liesivaara, Petri & Myyrä, Sami, 2016. "Income stabilisation tool and the pig gross margin index for the Finnish pig sector," 90th Annual Conference, April 4-6, 2016, Warwick University, Coventry, UK 236360, Agricultural Economics Society.
    2. Severini, Simone & Biagini, Luigi & Finger, Robert, 2019. "Modeling agricultural risk management policies – The implementation of the Income Stabilization Tool in Italy," Journal of Policy Modeling, Elsevier, vol. 41(1), pages 140-155.

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    Keywords

    Farm Management; Risk and Uncertainty;

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