Michele Donati

Organic Productions and Capacity to Respond to Market Signals and Policies: An Empirical Analysis of a Sample of FADN Farms

This article proposes a method of evaluating the impact of market and rural development policies oriented at stimulating the growth and spread of organic farming in Italy. Methodologically, we integrate positive mathematical programming (PMP) with cluster analysis (CA) to interpret farm dynamics and strategies and assess farm decisions. This provides useful information for interpreting production strategies adopted by homogenous groups of farms. The combination reveals an ex ante effect of market prices and rural development policies on decisions to invest in organic production. The analysis is applied to sets of farms from the Farm Accountancy Data Network (FADN) from two Italian regions, Emilia-Romagna and Sicily. The results reveal territorial and typological differentiation between farms moving toward organic production. In Emilia-Romagna, where agriculture is characterized by high specialization and high average revenue per hectare, the shift to organic production is more likely than in Sicily, where only the largest farms might consider the conversion to organic production.

How effective is greening policy in reducing GHG emissions from agriculture? Evidence from Italy

Agriculture contributes significantly to greenhouse gas (GHG) emissions, accounting for more than 10% of total CO2 emissions in the EU-28 area. The Common Agricultural Policy (CAP) plays an important role in promoting environmentally and climate friendly practices and needs to respond to the new environmental challenges by better integrating its objectives with other EU policies. In this respect, the recent CAP reform 2014-2020 made a further step, making a large part of direct payments conditional on new agricultural practices beneficial for the climate and the environment, i.e. greening. In this study we estimate the potential environmental benefits from greening in terms of GHG emissions in four regions of Northern Italy, one of the major European agricultural areas in terms of emissions. The emissions were quantified and broken down into the three main GHGs (carbon dioxide, methane and nitrous oxide) per production process. This information was subsequently used in a Positive Mathematical Programming (PMP) farm-based model on more than 3,000 farms, to estimate the effects of greening on regional land use and its contribution in reducing the total emissions. The new agri-environmental constraints produce a modest abatement of total emissions of greenhouse gases (-1.5%) in the analyzed area. The model estimates a reduction in CO2 emissions of about 2%. Emissions from nitrous oxide show a decrease of 2.1% and the reduction in the methane is about 0.4% compared to the observed scenario. The process of lightening that affected the greening during the CAP negotiation has inevitably resulted in missing an opportunity to introduce a significant positive change of behaviour into agriculture, in line with the expectations and needs of society for EU agriculture as a provider of public goods.

Farmer’s motivation to adopt sustainable agricultural practices

The 2014-2020 Common Agricultural Policy (CAP) reform defines new rules for farmers including maintenance of the ecological focus area (EFA). Sustainability is also a requirement to meet consumer expectations and a competitive advantage for firms. This paper aims to evaluate the farmers’ intention to implement sustainable practices related to the EFA measure and to the private sustainability schemes proposed by the food industry. The Theory of Planned Behaviour (TPB) was applied on a sample of durum wheat producers to analyse intentions 1) to maintain 7% of the arable land as an EFA, and 2) to implement the private sustainability scheme. Structural equation modelling was applied to test for the relative importance of intention determinants. The farmers’ attitude and past behaviour positively affect intentions to implement the EFA, while perceived behavioural control and attitudes predict intentions to adopt the private sustainability scheme. These results suggest possible interventions that public authorities and supply chain leaders might implement to stimulate farmers’ sustainable behaviours.

Impact Assessment of Greening and the Issue of Nitrogen-Fixing Crops Evidence from Northern Italy

In the CAP reform 2014–2020, the ‘green’ component of direct payments remunerates environmental services and includes three greening requirements: crop diversification, maintenance of permanent grassland and establishment of an ecological focus area (EFA). This paper evaluates the effect of ‘greening’ and payment redistribution on farm incomes and land use, considering two different hypotheses of the EFA weighting factor (Ewf) for nitrogen-fixing crops. The evaluation is developed at farm level by a positive mathematical programming (PMP) model and applied to more than 2,000 farms in northern Italy. The results show that crop diversification will mainly affect the cereal area, with significant reductions in maize and wheat, while the EFA requirement, especially with the lower Ewf, will boost the spread of protein crops. Nevertheless, ‘greening’ does not significantly affect farm income, while greater economic effects are mainly due to the redistribution of direct payments.

Incorporating risk in a positive mathematical programming framework: a dual approach

In this study we develop a new methodological proposal to incorporate risk into a farm-level positive mathematical programming (PMP) model. We estimate simultaneously the farm nonlinear cost function and a farmer-specific coefficient of absolute risk aversion as well as the resource shadow prices. The model is applied to a sample of representative arable crop farms from the Emilia-Romagna region in Italy. The estimation results confirm the calibration ability of the model and reveal the values of the individual risk aversion coefficients. We use the model to simulate different scenarios of crop price volatility, in order to explore the potential risk management role of an agri-environmental scheme.