The Impact of Crop Diversification Measure: EU-wide Evidence Based on IFM-CAP Model

This paper presents simulation results of crop diversification measure adopted as part of the CAP greening within the 2013 CAP reform. The simulations are performed using the EU-wide individual farm-based model for CAP analysis (IFM-CAP). The IFM-CAP model is a static positive mathematical programming model builds on the EU-FADN (Farm Accountancy Data Network) data. The model is calibrated to the FADN farm constant sample for 2007- 2009 representing around 60,500 individual farms. The advantage of this model relative to existing models is that it captures the full heterogeneity of the EU farm population and covering all Member States. Results show that most farms choose to increase their compliance with the diversification measure owing to the sizable subsidy reduction imposed in case of non-compliance. However, the overall impact on farm income is rather limited: farm income decreases by less than 1% at EU level, and only 5% of the farm population will be negatively affected. Nevertheless, for a small number of farms the income effect could be more substantial (more than -10%)