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Decoupled Payments and the Decision to Produce

Author

Listed:
  • James Breen

    (Rural Economy and Development Programme, Teagasc, Athenry, Co. Galway, Ireland)

  • Fiona Thorne

    (Rural Economy and Development Programme, Teagasc, Athenry, Co. Galway, Ireland)

  • Thia Hennessy

    (Rural Economy and Development Programme, Teagasc, Athenry, Co. Galway, Ireland)

Abstract

This paper assesses the impact of decoupling on farming in Ireland. The decision to engage in production post-decoupling is simulated using profit maximising multi-period linear programming models. The number of farmers that would financially benefit from disengaging from production is projected. The results of the economic models suggest that significant restructuring is likely to occur at the farm level as a result of decoupling. Projections of farmers’ production decisions post-decoupling are compared and contrasted to the results of a survey of farmers’ production intentions. The comparison shows that despite the significant changes in profitability that decoupling could engender, the majority of farmers intend to continue as before and are unlikely to change their production patterns. The survey of farmers’ intentions indicates that a large number of farmers still seem to consider the decoupled payment linked to production. The implications of these results for land use, agricultural production and farm numbers are discussed.

Suggested Citation

  • James Breen & Fiona Thorne & Thia Hennessy, 2005. "Decoupled Payments and the Decision to Produce," Working Papers 0502, Rural Economy and Development Programme,Teagasc.
    • Handle: RePEc:tea:wpaper:0502
    as

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    File URL: http://www.teagasc.ie/rural-economy/downloads/workingpapers/05wpre02.pdf
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    References listed on IDEAS

    as
    1. David A. Hennessy, 1998. "The Production Effects of Agricultural Income Support Policies under Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 46-57.
    2. Beard, Nick & Swinbank, Alan, 2001. "Decoupled payments to facilitate CAP reform," Food Policy, Elsevier, vol. 26(2), pages 121-145, April.
    3. Boris C. Swerling, 1959. "Income Protection for Farmers: A Possible Approach," Journal of Political Economy, University of Chicago Press, vol. 67(2), pages 173-173.
    4. Sckokai, Paolo & Moro, Daniele, 2002. "Modelling The Cap Arable Crop Regime Under Uncertainty," 2002 Annual meeting, July 28-31, Long Beach, CA 19860, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Verma, Rohit & Pullman, Madeleine E., 1998. "An analysis of the supplier selection process," Omega, Elsevier, vol. 26(6), pages 739-750, December.
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    Cited by:

    1. Thia Hennessy & Tahir Rehman, 2006. "Modelling the Impact of Decoupling on Structural Change in the Farming Sector: integrating econometric and optimisation models," Working Papers 0601, Rural Economy and Development Programme,Teagasc.
    2. McDonagh John & Farrell Maura & Mahon Marie & Ryan Mary, 2010. "New opportunities and cautionary steps? Farmers, forestry and rural development in Ireland," European Countryside, Sciendo, vol. 2(4), pages 236-251, January.

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