Evaluation of risk management tools for stabilising farm income under CAP 2014-2020

Alba Castañeda-Vera, Alberto Garrido

Abstract

Guaranteeing farm income stability is an objective of the European Union’s and the Spanish agricultural policies. In this paper, CAP direct payments, diversification, crop insurance and an Income Stabilisation Tool (IST) were compared considering (i) their effect on farm income and income stability, (ii) the expected farmers’ willingness for adoption, and (iii) the efficiency of public expenditure invested in supporting them. Main conclusions point at direct payments and  crop diversification as the most effective measures in decreasing income variability. Nevertheless, using crop  insurance or an IST has potential for both improving farm resilience to income variability and limiting public expenditure.


Keywords

Crop insurance; direct payments; diversification; income stabilisation fund; income volatility

Subject classification

Q10, Q18.

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