The effect of decoupling on the decision to produce: An Irish case study

Abstract

This paper assesses the impact of decoupling on farming in Ireland. The decision to engage in production post decoupling is simulated using profit maximising multi-period linear programming models. The number of farmers that would financially benefit from disengaging from production is projected. The results of the economic models suggest that significant restructuring is likely to occur at the farm level as a result of decoupling. Projections of farmers’ production decisions post decoupling are compared and contrasted to the results of a survey of farmers’ production intentions. The comparison shows that despite the significant changes in profitability that decoupling could engender, the majority of farmers intend to continue as before and are unlikely to change their production patterns. The survey of farmers’ intentions indicates that a large number of farmers still seem to consider the decoupled payment linked to production. The implications of these results for land use, agricultural production and farm numbers are discussed.