Farm investment behaviour under the CAP reform process

The results of the study, based on survey-based statistical analysis as well as on modelling of farm behaviour, can be summarised in four main outcomes. Similar to the results of a previous exercise (Gallerani et al. 2008), in the context of the present one (carried out in 2009) for about half of the farms decoupling did not result in any change. Among those farms showing some reaction, one of the more prominent effects is the increase in on-farm investment. The price trends in 2007/2008 and the ongoing economic and financial crisis have partially reshaped access to credit and households’ perception concerning their objectives, constraints and expectations. In particular, farms have witnessed a major reduction in access to credit. Overall, prices confirm their role as the key variable for investment choices. The change in economic conditions has increased the role of the CAP, and the importance of CAP payments in covering current expenditures has become more evident. Altogether, the combined effect of the recent policy reform, price and cost developments tend to reinforce the role of policy for the economic and social sustainability of farming. Notably, policy areas such as income support, investment and credit management, market access, as well as transitory and cross-policy mechanisms, appear to be of particular importance. Uncertainty (and related risk-management instruments) seems to play an increasing role in the investment decision process.