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Buysse, J., Verspecht, A., Van Huylenbroeck G. Department of agricultural economics,

Assessing the impact of the EU Common Agricultural Policy pillar II support using micro-economic data. Buysse, J., Verspecht, A., Van Huylenbroeck G. Department of agricultural economics, Ghent University, Belgium. Problem statement. Rural development:

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Buysse, J., Verspecht, A., Van Huylenbroeck G. Department of agricultural economics,

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  1. Assessing the impact of the EU Common Agricultural Policy pillar II support using micro-economic data Buysse, J., Verspecht, A., Van Huylenbroeck G. Department of agricultural economics, Ghent University, Belgium Jeroen Buysse Faculty of Bioscience engineering – Department of Agricultural Economics

  2. Problem statement • Rural development: • Importance of the budget ↑ (modulation) • Challenge to quantify the economic impact of the wide and complex mix of measures • Difficult to assess if it belongs to green box • International debate: is there a measurable effect on production? • National debate: is there a measurable effect on income?

  3. Case study: investment support in Flanders Why investment support? • different types of objectives • exists in different member states Why Flanders ? • highest share of budget for axis competitiveness (68%) • access to detailed panel data

  4. Micro-economic data: FADN + administrative data

  5. Model ynt = φn + τt + β1 ynt-1 + β2 int-1 + β3 int-2 + β4m smnt-1 + β5m smnt-2 + εnt Where ‘n’ is the farm index, ‘t’ is the year index, ‘m’ is the index of the different types of investment support measures, ynt represents the dependent variables which is output, costs and income for the different estimations, ynt-1 is the lagged value of the dependent, int-1 is the amount of investment at farm n for year t-1, int-1 is for year t-2, smnt-1 is the amount of investment support for the measure m for year t-1, smnt-1 for year t-2, φn is the estimated fixed farm effect, τt is the estimated fixed year effect Three models are estimated Model is dynamic investment effect is 1 or 2 years lagged Measurement of investment effect Measurement of support effect Support effect has 1 or 2 years lag Fixed farm effect and year effect

  6. Conclusion about the case study • National debate: • diversification + structural investment support: positive • environmental investment support: reduced income of the farmers in the short run • International debate on distortive support: • Structural support: not ‘green box’ • Diversification support: positive and a significant impact on the output but increase non-agricultural output

  7. General conclusion • Despite importance of pillar II support, limited number of articles • The paper illustrates how to make a detailed and quantitative assessment: • Panel data: no sample selection bias or endogeneity • Dynamic specification: the impact of investments remain in the system • Include 1 and 2 years lags of investment and support

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