Do CAP direct payments stabilise farm income? Empirical evidences from a constant sample of Italian farms

Agricultural and Food Economics

Table 3 Sources of variability of farm income in the whole sample and in the sub-groups of farms

		Variance decomposition^a						Relative importance of income sources
		Direct effects			Indirect effects			Relative importance of income sources
		p₁	p₂	p₃	p₁₂	p₁₃	p₂₃	REV/FI	DP/FI	EC/FI
Types of farming (TF):	TF	Mean						Mean
Specialist field crops	1	0.617	0.082	0.301	−0.026	0.294	0.028	2.84	0.81	2.65
Specialist horticulture	2	0.699	0.006	0.296	−0.005	0.321	0.004	2.81	0.02	1.83
Specialist permanent crops	3	0.688	0.045	0.267	−0.016	0.250	0.011	2.68	0.25	1.94
Specialist grazing livestock	4	0.601	0.062	0.337	−0.035	0.263	0.005	2.29	0.46	1.74
Specialist granivore	5	0.599	0.010	0.392	−0.006	0.562	0.008	4.07	0.19	3.26
Mixed cropping	6	0.640	0.056	0.304	−0.027	0.293	0.028	3.08	0.45	2.52
Mixed livestock and Mixed crops-livestock	7	0.605	0.055	0.340	−0.039	0.302	0.022	3.11	0.61	2.71
Economic size (ESU):
Small (Classes 1, 2, 3)		0.648	0.047	0.305	−0.022	0.269	0.019	3.04	0.56	2.61
Medium (Classes 4, 5, 6)		0.647	0.057	0.296	−0.024	0.282	0.014	2.58	0.38	1.96
Large (Classes 7, 8)		0.583	0.038	0.379	0.009	0.486	−0.003	3.32	0.31	2.63
PSE level:
No DP	0	0.698	0.000	0.302	0.000	0.328	0.000	2.83	–	1.83
Low	1st	0.718	0.007	0.275	−0.002	0.289	0.004	2.97	0.07	2.04
Low-Medium	2nd	0.664	0.034	0.302	−0.025	0.270	0.006	2.99	0.28	2.27
Medium-High	3rd	0.625	0.055	0.319	−0.014	0.321	0.015	2.81	0.56	2.36
High	4th	0.546	0.139	0.315	−0.059	0.251	0.040	2.19	1.00	2.19
Total sample		0.645	0.053	0.303	−0.022	0.288	0.015	2.75	0.43	2.18

Variance decomposition and relative importance of the three considered income sources
Source: Own elaborations on a constant sample of the whole Italian FADN farms, years 2003–2012
^aSubscripts 1, 2 and 3 refer to revenues, direct payments and external costs, respectively