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Perspectives on Addressing Market Instability and Income Risk for Farmers

Alan Matthews, Trinity College Dublin

IIIS Discussion Paper No. 324

Abstract

Successive reforms of the EU’s Common Agricultural Policy since 1992 have gradually switched support from market and price management to direct payments, which since 2005 are largely decoupled. This more market-oriented CAP means that farmers must now take responsibility for managing those risks that were formerly absorbed by market and price support policies. There is a vigorous debate on how to adapt the CAP to help farmers and the food chain cope better with risk and crisis management. This paper reviews the possible policy options and proposes an extended role for Member States to address agricultural income instability through either enhanced income insurance or income safety net schemes.

Keywords

Price volatility, agricultural market management, futures markets, income insurance, income safety nets, Common Agricultural Policy

JEL

Q18

 


Last updated 28 August 2014 by IIIS (Email).