Farmers’ Intention towards Energy Crops Adoption under Alternative Common Agricultural Policy.

1. Farmers’ Intention towards Energy Crops Adoption under Alternative Common Agricultural Policy. An Empirical Analysis in Andalusia (Spain). Giacomo Giannoccaro(a)*; Julio Berbel(b); Angela Barbuto(a); Antonio Baselice(a); Pasquale Marcello Falcone(a) (a) STAR* Agro-Energy Group, University of Foggia (b) University of Cordoba E-mail giacomo.giannoccaro@unifg.it; Tel. +39 0881 338 422 17th ICABR ConferenceRavello (Amalfi Coast – Italy): June 18 - 21, 2013INNOVATION AND POLICY FOR THE BIOECONOMY

2. Outline • Background • Aim of research • Materials and Methods • Results • Discussion

3. Background 1

4. Background • Renewable energy production is central in EU policy debate • one of the core issues in European Union (EU) Bio-economy strategy (European Commission, 2010). • Agricultural sector • main potential provider of raw materials for bio-energy production • Despite growing interest, renewable energy covers a small share European energy market • Several policy instruments implemented by EU members • i.e. investment subsidies, fuel tax, rebates, renewable fuel mandates and feed-in tariffs • CAP represents the main policy drivers of agricultural sector and may be of energy production • within the second pillar, several policy instruments are developed to promote on-farm energy production

5. Hydraulic 2.74% Wind 2.83% Biomass 3.51% Biogas 0.17% USW 0.14% Biofuel 1.09% Geothermal 0.00% Solar 0.75% Nuclear Renewable Energy Carbon Fuel Natural gas Energy consumption in Spain Renewable Energies Plan 2005-2010, has fixed the objective of covering 12% of the primary energy consumption Source: IDAE, 2010

6. Focusing on Southern Spain

7. Potential sources of Biomass in the Southern Spain Potentialbiomassenergyproductionisestimated of 3 958 Ktoe/year. In 2010 theprimaryenergyconsumption in theregionwas 18 555 Ktoe, Thereforebiomassenergycouldcover 21.3 % of energydemand. Currentlyitaccountsfor 6.2 % Source: AdaptatedfromEnergyAgency of Andalusia (2010)

8. Current biomass plants in the Southern Spain Powerplantsinstalled in Andalusiaconvers 40% of nationalpowerfrombiomass Source: AdaptatedfromEnergyAgency of Andalusia (2010)

9. Remarking… • Potential energy production from biomass is very high in the region • Installed biomass plants (i.e. power potentiality) is satisfactory, but current energy production is below of regional potentiality • Main problems refer to biomass supply: • Mostly, plants are feed-in by olive pits (peak period, storage expenditure) • The lack of a real market for biomass (i.e. energy crops still at experimental level) • The key challenge for plants remains security of feedstock supply • Farmers’ preferences are a key constraint to potential adoption

10. Aim of research 2

11. Objectives • To analyse farmers’ intentions towards on-farm adoption of energy crops under alternative CAP scenarios • To identify determinants of the adoption under alternative Policy scenarios

12. Materials and Methods 3

13. Methodology • Stated intentions on adoption of energy cropsunder two different scenarios • Scenario 1: Baseline (current CAP until next ten years) • Scenario 2: NO_CAP (complete abolishment of CAP after 2013) • Identification of determinants of energy crops adoption through probitmodel • Model A – adoption under baseline • Model B – adoption under NO_CAP scenario

14. Survey rationale Baseline Survey time 2009 Role of policy CAP liberalization 2013 2020 Farmer’s stated behavior Wouldyoukeeponthefarmactivity? Wouldyouadopton-farmenergycrops?

15. Sample description 201 interviewees

16. Econometrics regression • Farmer’sDecision= f (n1, n2, …, nn) • Probitregression= the probability of adoption as compared to the no adoption behavior

17. Results 4

18. Change in farmer’s behavior F armer 's choice Baseline Reject A doption D o not know Do n o t answer E xit T otal Reject 64 1 - - - 65 A doption 2 18 - - - 20 Do not know - - 1 - - 1 Do n o t answer - - - 1 - 1 CAP liberalizat. Exit 55 14 - - 45 114 Total 121 33 1 1 45 201 Source: ownelaboration Farmers’ stated intention • Unafectedcategory= Theirbehaviorwouldnotchangewhateverthepolicy in place • Afectedcategory= Farmer’sbehaviorwouldchangeifthe CAP wasabolished

19. General overview • Farmer’sreponsetowardson-farmadoption

20. Probit model: Adopters under Baseline scenario • SFP/SAPS payments and otherrelated CAP policy show no significance • Results are in line withliterature of innovationadoption Source: own elaboration Pseudo R2 = 0.35 Significance at 90%, 95% and 99% respectively with (*), (**) and (***)

21. Probit model: Adopters under CAP liberalization • Size of farmland and • off-farmjobfactors are also • significant • Farmsengaged in AES show • majorlikelihoodtoadopt Source: own elaboration Pseudo R2 = 0.54 Significance at 90%, 95% and 99% respectively with (*), (**) and (***)

22. Discussion 5

23. Main points • For the case study of Andalusia it seems that CAP payments will not affect farmer decision towards energy crops adoption • Main CAP influence is related to the farmer’s decision of continuing with farming activity after 2013 (indirect land use change) • Determinants such as farmer’s age and education, size of farmland, arable farming systems are in line with the innovation adoption literature • Due to the size of sample findings should be considered as preliminary results

24. Farmers’ Intention towards Energy Crops Adoption under Alternative Common Agricultural Policy. An Empirical Analysis in Andalusia (Spain). Giacomo Giannoccaro(a)*; Julio Berbel(b); Angela Barbuto(a); Antonio Baselice(a); Pasquale Marcello Falcone(a) (a) STAR* Agro-Energy Group, University of Foggia (b) University of Cordoba E-mail giacomo.giannoccaro@unifg.it; Tel. +39 0881 338 422 Thanksforyourattention! 17th ICABR ConferenceRavello (Amalfi Coast – Italy): June 18 - 21, 2013INNOVATION AND POLICY FOR THE BIOECONOMY