Consequences of the 2003 cap reform on a Mediterranean agricultural system of Portugal

Abstract

Agriculture in dry land Mediterranean areas faces a considerable level of production risk as a result of the unpredictable weather. Governmental income stabilisation instruments have had a major impact on Mediterranean farms in changing land allocation, and changing income levels and variability. Using a mathematical programming model, the impact of the 2003 CAP reform on land allocation and on income variability is evaluated for a Portuguese Mediterranean farm. The results show an increase of extensification of production activities. They also show an increase in total farm income, a reduction in relative total income variability, and na increase in relative production income variability.