An investigation into the impact of policy reform on the level of structural change in the agri-food sector of Ireland, Denmark and the Netherlands

This paper conducts a detailed, micro-focused investigation on the implications of recent agricultural policy changes on the structure of production systems in Ireland, Denmark and the Netherlands in terms of farm numbers, system switching, specialisation, the role of economies of scale, on-farm investment, off-farm employment and economic viability. Given the close relationship between farm structure and agricultural production, the impact of the recent CAP reform on production decisions should give a good indication of the form agricultural structural change will take. Two competing hypotheses of post decoupling structural change are proposed; a ‘production inducing effect’ and an ‘expectations effect’. Using Irish, Danish and Dutch micro-data, which are comparable due to their participation in FADN, a descriptive analysis of the key characteristics of production in the agri-food sectors in each country will be performed using key indicators of structural change. The results indicate that the ‘expectations effect’, which claims that producers may adopt a ‘safety first’ strategy and make only minimal changes to production plans in case future payments are reassessed and re-linked to production or an agricultural activity, seems to be prevalent.