A method for evaluating the extent to which farm subsidies can be de-coupled before profitable arable land is abandoned in the European Union

This paper evaluates concerns over the "abandonment of production" in the context of the recent CAP reform as it applies to the arable sector. The particular focus of the evaluation is on the extent to which the proposed "single farm payment" can be de-coupled from production and yet avoid the abandonment of land on which production is expected to be profitable. An analytical framework is developed which indicates the most important non-policy factors are the profitability of the land, the variability of yield and the grower's degree of risk aversion. The conclusion of a numerical analysis using this framework is that 85% de-coupling is unlikely to lead to abandonment of land in any arable region of the EU, and that 95% de-coupling is also unlikely to lead to abandonment in the majority of arable areas.