CARERA Meeting Uppsala, 8 June 2007

1. CARERA Meeting Uppsala, 8 June 2007 Deliverable - D9 Effects of Fischler’s Reform on Farming Activities and Employment Levels F. Arfini, M. Donati, R. Gigante (University of Parma)

2. Contents • Quantitative CAP assessment by using PMP model with respect to the FADN sample concerning the regions: • Emilia-Romagna (Italy) • East Wales (UK) • Kassel (Germany) • Anatoliki Makedonia and Thraki (Greece) • Ostra Mellansverige (Sweden) CARERA Meeting University of Parma

3. Model application The policy and market scenarios identified in this study are presented below: Baseline scenario: it is the scenario used for the calibration of the models for each FADN Region. In term of policy financial aid are related to the situation before the introduction of the Mid Term Review. In term of market scenario price are related to the year 2003. Scenario 1 (S1): full decoupling for all products benefiting from direct support, including milk, according to Annex VI of Reg. 1782/2003, and sugar. Scenario 2 (S2): Scenario 1 plus relative price variation referred to year 2013 (on the basis of FAPRI projection) CARERA Meeting University of Parma

4. Model application The aim is to evaluate the net effect of the decoupling policy without market influence and the response of the farm decision with respect to estimated variations in agricutlural products market. The price projections considered in Scenario 2 are obtained by FAPRI source. CARERA Meeting University of Parma

5. Base situation Baseline Land Allocation CARERA Meeting University of Parma

6. Base situation Emilia-Romagna Anatoliki-Makedonia-Thraki CARERA Meeting University of Parma

7. Base situation Kassel East-Wales CARERA Meeting University of Parma

8. Base situation Ostra Mellansverige CARERA Meeting University of Parma

9. Simulation Policy Scenarios Assessment Land Allocation CARERA Meeting University of Parma

10. Model results – Land allocation S1 S2 CARERA Meeting University of Parma

11. Model results – Land allocation S1 S2 CARERA Meeting University of Parma

12. Simulation Policy Scenarios Assessment Animal Production CARERA Meeting University of Parma

13. Model results – Animal Production S1 S2 CARERA Meeting University of Parma

14. Simulation Policy Scenarios Assessment Economic Variables CARERA Meeting University of Parma

15. S1 S2 Model results – Economic variables Gross Margin GSP CARERA Meeting University of Parma

16. Model results – Economic variables Subsidies S1 S2 Variable Costs CARERA Meeting University of Parma

17. Simulation Policy Scenarios Assessment Labour CARERA Meeting University of Parma

18. Model results – Labour Family Labour Extra-family Labour CARERA Meeting University of Parma

19. Conclusions • Decoupling constitutes an incentive to move the production plan toward those crops that permit to minimize the productions costs and to reach highest revenue without interferences of coupled subsidies. • Animal productions are more influenced by the dynamics on market prices than by the new subsidy regime. • The economic results seem improve for the most part of the regions, as a consequence of the restoring of real farm processes profitability and, for some regions, thanks to the new decoupled premium on the milk production. • Decoupling leads to a decrease in the level of effort required by the farm activities. The change in the and the decrease in livestock induce a reduction of the contribution of the family and extra-family workers in farm activity. CARERA Meeting University of Parma