Income support policies and revenue variability: evidences from Italian farms

During the last decade, agricultural commodity markets have experienced increasing volatility. In addition, the drop of coupled price support stressed that the philosophy of intervention of the CAP will leave European farmers more directly exposed to output price fluctuations. Our data analysis is a first attempt to investigate two main issues: on one hand we investigated how the changing of the EU first pillar policy, and the moving to a total decoupled intervention, affected the income variability of Italian farms; on the other hand we focused on the potential effects of farm characteristics on income variability. Our empirical analysis highlights that the increasing prices volatility has affected farm revenues and the change of EU policy support made market components less relevant for income stabilization objectives. On the contrary, decoupled aids are likely to have reduced the impact of last two year volatility. Moreover, we found that the stabilization role of EU policies have played a not negligible role in stabilizing farm incomes.