VOLUNTARY SET ASIDE OF ARABLE LAND IN AUSTRIA eingereicht von:

In this report microeconometric methods are applied to explain the voluntary set aside of arable land of Austrian farms. The descriptive analysis of the data shows that the majority of the small scale farms do not set aside arable land. But if they do set aside land, they set aside substantial shares. The microeconometric estimations confirm that the decision to set aside consists of two steps. The first step is whether to set aside at all and the second step is how much to set aside. The type of a farm has the biggest effect on the decision. Soil quality, the distribution of the soil quality, off farm work and the participation in the ÖPUL-program have significant, but generally small, influence as well. The results vary somewhat for different major production areas. If the two step model is used to calculate the expected set aside of a farm, it generally is low as farms have low probabilities to set aside. Most of the farms under the general regulation set aside small shares of arable land. That is due to the fact that every set aside that is more than the mandatory 10 percent is defined a voluntary set aside. Therefore, unfortunately, the statistical estimations are almost impossible to render and hence set aside is not as well explained by the model for farms under the general regulation as for the small scale farms. The main conclusion of the research is that there were no factors that lead to massive set aside. This can be interpreted as a sign that cultivating arable land generally still pays in Austria.