Analysing the Impact of Decoupling at a Regional Level in Ireland: A Farm Level Dynamic Linear Programming Approach

This paper describes a methodology to assess the impact of the decoupling of payments on Irish farms at a regional level. The methodology is based on a farm level dynamic linear programming model which optimises regional gross margin under a set of constraints. Regionally representative farms are selected using cluster analysis. The model maximises aggregate gross margins from all the farm types in a region allowing land and milk quota to transfer between farms within the region. The model is estimated for a baseline scenario, assuming no policy change, and under a decoupled scenario where farm payments are fully decoupled from production. An example of an impact study at the Border region in Ireland is presented in this paper to demonstrate the methodology.