Abstract
Given the importance of the Common Agricultural Policy in Europe, farm subsidies are amongst the most important drivers of farm-level incomes and outcomes. In this chapter, we describe the development of a detailed static farm-level subsidies model. This model is static, abstracting from behavioural, spatial and temporal complexity. The model, however, does simulate the finer detail of agricultural subsidies, which allows us to assess the interaction between programmes and assess their outcomes across the distribution of farms. The model contains detailed policy rules going back to 1984 and thus allows for an assessment of the behavioural and income drivers of changes in EU Common Agricultural Policy (CAP) over a thirty-year period. Given the behavioural and biological lags and path dependence in structures at the farm level, incentives that arose out of policy in the 1980s and 1990s still influence the structure of the agricultural sector today. The research shows that subsidies paid to farmers created multiple and substantial nonlinearities in the potential subsidy income budget constraints of cattle farmers during the coupled direct payment Era 1993–2004. From an agricultural perspective, the complexity of dealing with nonlinear constraints in order to maximise subsidy income added an extra layer to an already complex decision-making process that deals with risk and uncertainty on a daily basis.
Co-Authored with Michele McCormack
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O’Donoghue, C. (2017). Farm Subsidy Microsimulation Modelling. In: Farm-Level Microsimulation Modelling. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-63979-6_5
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DOI: https://doi.org/10.1007/978-3-319-63979-6_5
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