Die Bodenkultur - Journal for Land Management, Food and Environment


Model calculations for farming decisions under new economic conditions


Membership of the EU has changed the economic conditions under which Austria's farmers must operate. EU market rules and lower prices now apply to many agricultural products, and the Austrian Environmental Programme for Agriculture (ÖPUL) has also been redesigned. Accordingly, farmers in Austria are faced by a number of new decisions.

This paper addresses the following questions through the use of model calculations:

1 What influence does the participation in ÖPUL have on farm holdings?

2. Based on economic considerations, should a farmer choose the general or simplified scheme for EU compensatory payments for cereals, protein cropsand oilseeds?

3. What influence do the national (degressive) compensatory payments from 1995 to 1998 have on the optimal use of arable land of farm holdings?

Linear programming techniques are applied within the calculations. The sum of individual crop gross margins across a holding is maximised for each of a range of initial conditions. These conditions vary according to participation/non-participation in ÖPUL, the available arable hectarage and its suitability for different crops, crop yields, and inclusion/non-inclusion of national compensatory payments in 1996.

The results show that participation in ÖPUL does have financial advantages for a holding. The specifications included within ÖPUL also influence the optimal use of arable land on the holding. The greatest iduence is recognized on those holdings featuring only those crops which qualify for compensatory payments.

As the use of crops not qualifying for such payments rises, the implications of participation in ÖPUL become less important. No clear conclusions can be drawn regarding the choice between the general and simplified compensatory payrnent schemes. This is closely dependent on the particular crop choices and associated yields on any individual holding. The optimal use of arable land is infiuenced by national compensatory payments, which are to be paid between 1995 and 1998 on cereals, protein crops and oilseeds, just to a small extent.

Key-words: Economic analysis, agricultural reform, EU compensatory payments, environment Programme.