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The impact of decoupling and price variation on dairy farmers’ strategy: overview of theoretical and real effects

Abstract : The reform of the Common Agricultural Policy (CAP) in 2003 has resulted in substantial changes to the way in which dairy farmers are subsidized. Moreover, dairy farmers are also facing an unprecedented situation with major price fluctuations of agricultural raw materials. In this chapter, we discuss the cross effects on the productive strategy of French dairy farms due to the 2003 reform and to price variation. A model based on mathematical programming has been developed to determine how dairy farmers might re-evaluate their systems to identify an optimal production plan. While respecting the principle of agent rationality (maximization of profit), the model incorporates the economic risk related to the volatility of input and output prices. Thus, the model maximizes the expected utility of income while taking into account a set of constraints: regulatory, structural, zoo-technical, agronomic and environmental. This model allows a large choice in term of intensification level (input use) and productive combination. The model is applied to four types of dairy farms to show their different reactions to the reform. The simulations show how the implementation of the single payment scheme encourages farmers to increase the share of grassland. However, the increase in cereal prices is a strong incentive for farmers to intensify forage production in order to free up land for crop production. The decoupling of premiums for male bovines led farmers to reduce, all things being equal, this activity in order to increase cereal production.
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  • HAL Id : hal-02744946, version 1
  • PRODINRA : 47189



Baptiste Lelyon, Vincent Chatellier, Karine Daniel. The impact of decoupling and price variation on dairy farmers’ strategy: overview of theoretical and real effects. Evaluation of CAP Reform at Disaggregated Level. OECD Conference, Organisation de Coopération et de Développement Economiques (OCDE). FRA., Mar 2010, Paris, France. ⟨hal-02744946⟩



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