Does the crop diversification measure impact EU farmers’ decisions? An assessment using an Individual Farm Model for CAP Analysis (IFM-CAP)

Abstract

This paper presents the first EU-wide individual farm level model (IFM-CAP – Individual Farm Model for CAP Analysis) to assess the impacts of the crop diversification measure introduced by the 2013 CAP reform as part of CAP ‘greening’. Based on Positive Mathematical Programming, IFM-CAP simulates the behaviour of each individual farmer in the EU-FADN (Farm Accountancy Data Network) database, under the policy constraint of crop diversification and provides distributional impacts over the entire EU farm population. Simulation results show that the effects of the crop diversification measure on the EU farming sector are rather small. At the aggregate EU level, the proportion of the reallocated area due to the diversification measure represents less than 1% of the total agricultural area and the crop production and income decline by less than 0.5%. At the individual farm level, the impacts could be more pronounced (more than –25%), although the number of affected farms by the measure remains small (around 5% of the total farm population). The most constraining component of the diversification measure appears to be the 75% threshold imposed for the main cultivated crop.