Trends in family labour, hired labour and contract work on French and Swiss crop farms: The role of agricultural policies

The objective of this article is to analyse the trends in on-farm labour use, including own family labour, hired labour and contract work, and to assess the factors driving their evolution in France and in Switzerland during 1990-2007. A particular attention is given to agricultural policies, namely the level and type of support. Results indicate that crop area payments discourage the different labour demands in both countries, while environment and investment payments favour contract and hired labour in France. Contract labour and family labour are substitute and hired labour and family labour are complement in France.farm labour, hired labour, contract work, policies, Agricultural and Food Policy, Farm Management, Land Economics/Use,

Fixed costs involved in crop pattern changes and agri-environmental schemes

Agri-environmental schemes are the main policy instrument currently available in the European Union to promote environmentally friendly farming practices. Nevertheless, the adoption rate of these measures is still limited. This paper develops a profit maximizer theoretical framework to explain the farmer’s sign-up decision and the area to put under an agri-environmental measure characterised by a change in the crop pattern. The application concerns an agri-environmental measure awarding the introduction of alfalfa in cereal farms in Natura 2000 designated areas of Aragon (Spain). The econometric specification accounts for both the upper censoring of the enrolled area, constrained by the available eligible area, and the self-selection of contractors according to the extra-profit of their enrolment. To test the absence of fixed costs of enrolment, a simple tobit with a lower and an upper bound, that corresponds to the non fixed costs situation, is compared to the censored model with selection. Estimated specifications based on the enrolled area do not provided normally distributed residues and are not suitable to carry out the likelihood ratio test. Estimated specifications based on the share of enrolled area in the eligible area provide normally distributed residues. The likelihood ratio test rejects the absence of fixed costs. Technical factors as well as social capital variables are taken into consideration as determinants of technical and transaction costs. Estimation results show that there is an adoption barrier derived from the know-how affecting the fixed compliance costs of introducing the new crop. In addition, there is an adoption barrier derived from transaction costs which are reduced in the presence of social networks. These results suggest that a non linear payment mechanism or auctions might be suitable to ensure a better coverage of Natura 2000 eligible areas by the contracts, with a limited increase in related public expenditures.agri-environmental scheme, land use, fixed costs, transaction costs, qualitative and limited dependent variable model

Re-considering Agri-Environmental Schemes premiums: the impact of fixed costs in sign-up decisions

Current EU legislation states that premiums for agri-environmental schemes must be calculated based on forgone profit and additional costs. This approach has been implemented for the last decades without much success in farmer uptake, a situation that might even worsen as the 20% additional payment as incentive for participation has been excluded in the new EU Rural Development Framework 2007-2013. This paper tries to explain why supply side estimated premiums might not suffice to assure farm profitability investigating the role that fixed costs have on adoption. A farm profit maximizing model is proposed where fixed and transaction costs are split from variations in marginal profit. This model is then developed to identify the potential barriers to adoption associated with the presence of fixed compliance costs. A sample of farmers eligible for an agri-environmental scheme entailing a land-use change is used to test whether the theoretical models are valid for explaining adoption decisions. Two different econometric specifications are used to identify the role of fixed costs, one assuming that uptake and surface decisions are governed by the same variables and another distinguishing both decisions. Estimation results show that there is an adoption barrier derived from the initial farm technical assets and know-how affecting the fixed compliance costs of introducing the new crop. Therefore not compensating for fixed costs can curtail agri-environmental policy success. In addition, there is an adoption barrier derived from transaction costs which are reduced in the presence of social networks.Agri-environmental schemes, fixed costs, adoption, Environmental Economics and Policy,

Biodiversity Productive Capacity in Mixed Farms of North-West France: A Multi-Output Primal System

Previous studies on the productive value of biodiversity emphasized that crop diversity increases crop yields. Here, we focus on the productivity of crop diversity and permanent grasslands for crops and milk. Using a GMM approach, we estimate detailed production functions using a sample of 3960 mixed farms from the FADN between 2002 and 2013. We highlight that permanent grasslands enhance crop production. We confirm that crop diversity increases crop and milk yields. Permanent grasslands and crop diversity are however substitute inputs. We also find that both of these biodiversity productive capacities influence variable input productivities. These results suggest the potential adaptations of farmers’ choices to environmental measures.La littérature sur la valeur productive de la biodiversité a souligné que la diversité des cultures augmentait les rendements des cultures. Nous examinons ici la productivité de la diversité des cultures et des prairies permanentes pour les céréales et le lait. A partir de la méthode des moments généralisés, nous estimons un système de fonctions de production détaillées sur un échantillon de 3960 fermes du RICA spécialisées en polyculture-élevage entre 2002 et 2013. Nous trouvons que les prairies permanentes augmentent les rendements des cultures. Nous confirmons que la diversité des cultures augmente les rendements des cultures mais aussi les rendements laitiers. Cependant, nous trouvons que la diversité des cultures et les prairies permanentes sont substituables. Elles interagissent par ailleurs avec les intrants variables. Ces résultats mettent en avant un potentiel d’adaptations de la production des agriculteurs à des mesures environnementales

De l’intérêt des observatoires dans la résolution des conflits locaux : une approche en termes de science politique et de droit public

[paper in French] The article offers to describe and analyse the economic motivations for creating and operating observatories of agricultural practices. An observatory is a unit provided with technical, financial and human means as well as information and data, and which uses them to produce information and knowledge for both private and public users. The main obstacle in creating an observatory is its initial cost, as its activity is profitable only in the medium to long term. A second obstacle is maintaining cooperation between all the involved parties since investments and benefits are not equally shared among them. Finally, public policies also give incentives to create and maintain observatories. Performance-based contracts offered to farmers tend to encourage them to increase their knowledge regarding the environmental impacts of agricultural practices. Contracts based on agricultural practices rather than environmental impacts have the opposite effect: the government, bearing all the costs related to uncertainties as to the environmental outcomes, is not willing to offer high payments to the farmers, thus discouraged. We argue that innovative agri-environmental policies, environmentally-efficient and balanced as to responsibilities, can be offered to farmers if they are negotiated by all parties within observatories.observatories, contracts, obligations, governance

Effets des mesures agro-environnementales

Les mesures agri-environnementales (MAE) visent à améliorer les impacts environnementaux de l’agriculture, à l’aide de subventions allouées sur la base d’engagements volontaires des agriculteurs pour une durée d’au moins 5 ans. Au sein du deuxième pilier de la PAC, elles sont les seules mesures d’application obligatoire par les Etats membres. En France, elles ont représenté près de 6 % des aides directes totales versées aux agriculteurs pour la période 2000-2006. Les MAE ont été généralisées dans l’Union européenne (UE) dans les années 90. Elles sont très diversement utilisées par les Etats membres. Les effets des MAE dépendent à la fois de leurs principes et modalités d’action, relativement originaux, mais aussi de l’évolution des autres instruments de la PAC. Les recherches menées avec le soutien du projet européen ITAES se sont attachées à analyser les déterminants de l’efficacité environnementale des mesures agri-environnementales. Ces déterminants relèvent des processus bio-physiques reliant les pratiques agricoles aux impacts environnementaux, du comportement économique des agriculteurs et des aspects institutionnels relatifs à l’élaboration et à la mise en oeuvre des mesures. Des pistes et des outils méthodologiques pour l’amélioration des dispositifs et des contrats MAE ont été testés. Les investigations ont principalement été effectuées dans neuf régions ou pays de l’UE. 2000 agriculteurs ont été enquêtés, 200 agriculteurs engagés dans des MAE ont été suivis pendant un an, et près de 300 représentants d’organisations gouvernementales et non gouvernementales ont été interrogés.

Programmes agri-environnementaux en présence d’effets de seuil

L’objectif de ce papier est de proposer des procédures d’élaboration et de mise en œuvre des programmes agri-environnementaux pour assurer leur efficacité environnementale et sociale, lorsque les processus biophysiques en jeu sont caractérisés par des effets de seuils. La régulation publique est confrontée à deux problèmes bien distincts : d’une part, les asymétries d’information relevant classiquement de la théorie des contrats et des solutions qu’elle préconise et, d’autre part, une incertitude que partagent régulateur et agents sur la relation entre pratiques agricoles et état de l’environnement. Ces deux difficultés se cumulent fréquemment dans les programmes agrienvironnementaux et peuvent conduire, en présence d’effets de seuils, à l’absence d’effet environnemental et au découragement des agriculteurs. À partir d’un modèle micro-économique et de l’analyse approfondie d’un exemple, cette contribution montre qu’une gestion pérenne et évolutive des programmes permet une capitalisation locale des compétences et un gain d’efficacité. Cette gestion vise à tirer parti d’économies d’échelle et d’apprentissage tant managériales que techniques, à condition de spécifier des contrats dont la réalisation contribue à préciser et à quantifier des effets de seuil souvent mal connus et localement spécifiques. Dans certains cas, l’instauration par le régulateur d’un taux minimal de contractualisation dans une zone donnée constitue une information conduisant à accroître la probabilité de participation des agriculteurs.threshold effect, agri-environmental policy

La difficile question des biens publics en agriculture : réflexions autour des outils économiques

[Paper in French] The European Union (EU) has gradually increased the importance of environmental issues in the objectives and instruments of the Common Agricultural Policy (CAP). Agro-environmental schemes, enforced within all of the Member States since the 90’s, are contracted by the farmers on a voluntary basis. Since the enforcement, in 2005, of the cross-compliance of the whole CAP direct payment, almost all farms in the EU are now subject to environmental and sanitary constraints. The efficiency of these mechanisms and their consistency with pre-existing instruments are nonetheless questionable, as shown by various research and evaluation reports. However, the provision of public goods through agriculture can be seen as a legitimate objective of the agricultural policy, even though the clear wish to propose a simplified CAP does not prima facie fit with a broad consideration of the public good issue in agriculture. This article proposes a critical review of the CAP in reference to that objective. A particular attention is paid to the provision of environmental public goods based on the assessment of past actions and recent progress. Besides, we question whether the CAP should, and could, support the farmers in meeting objectives in terms of environmental production. Our analysis intends to shed light on these issues which are currently largely debated. Finally, we present perspectives offered by economic instruments that could be mobilised in view of delineating the different options for the future CAP (post-2013). Within the next years technological progress, market forces, and the impacts of climate change will probably be the most important drivers of the evolution of agricultural structures, and therefore of the provision of environmental public goods. With its influence on the various determinants of the agricultural activities, the CAP has a key-role to play in the provision of such public goods. Hence, the future policy will have to pay greater attention to public goods if, in response to the social demand, it is decided to make them one of the backbones of the new CAP design. However, such a greening reorientation of the policy can turn thorny with respect to the maintenance of the initial objectives of the European policy: securing farms’ viability and maintaining the competitiveness of the agricultural sector within the EU.Common Agricultural Policy, public goods, agriculture, environment, economic instruments

Productivity and Subsidies in European Union Countries: An Analysis for Dairy Farms Using Input Distance Frontiers

The major objective of this paper is to examine the association between agricultural subsidies and farm efficiency using data from the European Farm Accountancy Data Network (FADN) for operations specializing on dairy. The analysis covers the 18 year period going from 1990 to 2007 and includes the following seven countries: Denmark; France; Germany; Ireland; Spain; the Netherlands; and the United Kingdom. Separate translog stochastic input distance frontiers are estimated for each country. The key results show high average technical efficiency (TE) ranging from 91.8% to 94.9%, average rates of technological change going from -0.6% to 1.4%, and increasing returns to scale (1.24 to 1.44) across all seven countries. In addition, higher subsidy and hired labor dependence are found to be significantly associated with higher technical inefficiency across all seven countries. Moreover, the latest Common Agricultural Policy (CAP) regime introducing fully decoupled payments has reduced TE in all countries considered except Denmark.Subsidies, CAP, technical efficiency, technological progress, returns to scale, Europe, dairy production, input distance frontiers, Livestock Production/Industries, Productivity Analysis,

Influence of Agricultural Support on Sale Prices of French Farmland: A comparison of different subsidies, accounting for the role of environmental and land regulations. Factor Markets Working Document No. 51, June 2013

This paper investigates the determinants of agricultural land price in several regions in France over the period 1994-2011, using individual plot transaction data, with a particular emphasis on agricultural subsidies and nitrate zoning regulations. It found a positive but relatively small capitalisation effect of the total subsidies per hectare. The data revealed that agricultural subsidies capitalised, at least to some extent, but the magnitude of such a capitalisation depends on the region considered, on the type of subsidy considered, and on the location of the plot in a nitrate surplus zone or not. Only land set-aside premiums significantly capitalise into land price, while single farm payments have a significant positive capitalisation impact only for plots located in a nitrate-surplus zone