The problem

Farmers across Europe are facing rapidly changing and variable circumstances in which they need to operate and run their businesses. This is particularly relevant for new Member States, because a larger proportion of their populations are employed in agriculture. In addition to ongoing reviews of the Common Agricultural Policy (CAP) and the gradual liberalisation of agricultural markets spearheaded by the World Trade Organisation (WTO), there are the wide-ranging opportunities and risks of EU enlargement. This raises then need to analyse the potential for different risk management methods that will help stabilise farm incomes.

Overview:

‘Income stabilisation’ will undertake case studies of farm-business risk exposure across new EU Member States assessing, for example, the financial effects of future CAP and WTO policy developments. A farm-level simulation model will:

• Illustrate the effects of various scenarios on income volatility and crisis risk
• Quantify the economic effects of prospective risk management instruments, both at farm level and in terms of budgetary consequences
• Provide the Commission with an operational assessment for a range of risk-management instruments

Contribution to policy development:

• The project will provide a better-informed basis for future discussion and negotiations on developing policies within the CAP and WTO.
• It will help policy-makers identify opportunities for more effective management of farm-business risk.
• There will be improved understanding of policies that can help provide greater income stability to farmers.
• A better understanding of farm-business risks will help identify incentives that encourage greater efficiency within the industry.

Project deliverables

• Annual reports – April 2006/2007
• Report: economic impact of risk management instruments – May 2007
• Report: farmers’ perceptions of crisis risk management – October 2007
• Report: review of risk management – January 2008
• Report: policy options for crisis risk management – February 2008
• Report: proceedings of project workshop – February 2008
• Several reports on agricultural risk exposure and risk management – March 2008
• Report: crisis risk management in EU agriculture – April 2008
• Final report – April 2008

Dissemination

• Website (to be updated during the project) – July 2005
• Non-technical summaries of project reports and significant findings will be prepared for the popular and trade press
• A wide range of farm-industry stakeholders will be invited to participate in a final-year
  project workshop
• Promote project findings at national, EU and international workshops and conferences
• Publish significant scientific and economic findings in international peer-review journals

Technical information

Project acronym: Income stabilisation
Project’s official full title: Design and economic impact of risk management tools for European agriculture
Research priority: 1.1. Modernisation and sustainability of agriculture and forestry, including their multifunctional role in order to ensure the sustainable development and promotion of rural areas
Specific webpage: http://www.incomestabilisation.org/
Proposal/contract no: 006613
Start date: 1 April 2005
Kick off meeting: April 2005
Completion date:1 April 2008
European Commission scientific officer: Hans-Jorg Lutzeyer, Hans-Joerg.Lutzeyer@ec.europa.eu

Coordinator:
Prof. dr Ruud Huirne (ruud.huirne@wur.nl)
Name: Wageningen University
Abbreviated name: WU
Address: Business Economics & Institute for Risk Management in Agriculture (IRMA)
Wageningen University
Hollandseweg 1
6706 KN Wageningen
Country: Netherlands
Tel: + 31 317 484065
Fax: + 31 317 482745
Website: www.wau.nl

Partners

Name: Agricultural Economics Research Institute
Abbreviated name: LEI
Country: Netherlands    

Name: Rheinische Friedrich-Wilhelms-Universität
Abbreviated name: UBonn
Country: Germany         

Name: Universidad Politecnica de Madrid
Abbreviated name: UPM
Country: Spain   

Name: Szkola Glowna Gospodarstwa Wiejskiego
Abbreviated name: SGGW
Country: Poland 

Name: Szent István University
Abbreviated name: SIU
Country: Hungary         

Name: NV Interpolis
Abbreviated name: IP
Country: Netherlands