REECAP 7th Annual Meeting

Factors influencing dairy farmers’ participation in the Income Stabilisation Tool: Evidence from Northern Italy

Not scheduled

20m

German Centre for Integrative Biodiversity Research (iDiv) Halle-Jena-Leipzig

Quasi-experimental work in the field of agricultural economics and agri-environmental policy and agri-food business economics with clear links to policy questions Session Block

Speaker

Thi Thanh Thuong Dang (Università Cattolica del Sacro Cuore)

Description

The Income Stabilisation Tool (IST) was introduced in the 2014 reform of the Common Agricultural Policy (CAP) as a mutual fund to compensate farmers for income losses due to price risk, distinguishing it from other mutual funds that primarily cover production losses. However, IST participation remains low across the EU member states. This paper contributes to the ongoing discussion on the effectiveness of publicly supported risk management tools by exploring the factors that drive farmers’ participation in the IST. We analyse the drivers for dairy farmers to participate in a sectorial cow-milk IST, implemented by two dairy cooperatives in Brescia, one of Italy’s most important dairy provinces, with high-density livestock systems.

The analysis combines an extended secondary database with survey data to provide additional insight into farmers’ perceptions of policy changes and their agro-ecological characteristics. Based on farm location, the dataset is then merged with daily weather data from Agri4cast, which includes key meteorological variables such as temperature, rainfall and vapour pressure. We employ a Linear Probability Model (LPM) to examine the determinants of IST participation. To assess the robustness of our results, we conduct multicollinearity diagnostics, alternative model specifications (logit and probit), and bootstrap resampling to ensure the stability and reliability of our findings.

Our results show that socio-economic and risk factors are more strongly associated with IST adoption than agro-ecological factors. In particular, education plays an important role in IST subscription, with farmers having a lower education level being significantly associated with a higher participation rate. Income stabilisation through direct payments acts as a substitute for IST, while farms experiencing more frequent weather stress show significant association with lower IST adoption. This suggests the need for a more holistic approach to promoting novel risk management tools such as IST to ensure that they remain attractive and accessible to farmers. Italian farmers’ preferences for specific features of risk management tools remain an underexplored area in the literature, hence, it is crucial to investigate which features drive adoption and which barriers hinder participation.