MODELLING FARMERS' RESPONSE TO A DECOUPLED SUBSIDY VIA MULTI-ATTRIBUTE UTILITY THEORY AND E-V ANALYSIS

In this paper we simulate changes in crop land allocations made by farmers in Southern Spain due to the implementation of a flat-rate subsidy. In order to reproduce farmers' decision-making process, we first group farmers by farm size into three categories and then elicit a general utility function for each group. The elicitation of the bi-attribute utility functions, based on observed crop land allocation, does not require interaction with the farmers. The results suggest that, with the same EAGGF expenditure, small and medium-sized farms in this region would benefit from this alternative scheme in terms of higher expected total gross margin, flexibility and freedom of crop choice. The new scheme reduces control and monotoring responsabilities for Member States and the Commission and moves toward a more decoupled subsidy in line with the proposal for the Mid-Term Review of the Common Agricultural Policy.