The Effect of CAP Policy Incentives for the Environmental and Economic Performance of Cereal Farms in South-Central Bulgaria

Abstract

This paper aims to assess the effects of three mechanisms of the Common Agricultural Policy incentivizing environmentally friendly farming practices, on a model cereal farm’s environmental and economic performance. Based on linear goal programming method and input data on the farm’s size, production system, crop yield and gross margin per crop, the model optimizes the farm’s production structure. The results indicate that the availability of support is essential for the economic results of cereal farms in South-Central Bulgaria. Generally, higher gross margin corresponds to higher greenhouse gas emissions and vice versa. Nevertheless, the addition of policy support decreases the degree of this dependency by improving the profitability of some less GHG-intensive crops. This allows farmers to consider more environmentally-friendly crops and production practices without having to cut profits. An optimal balance between farms’ environmental and economic performance is crucial in order for agriculture to continue to support vital ecosystem services.