Modelling the CAP Arable Crop Regime in Italy: Degree of Decoupling and Impact of Agenda 2000

In this paper, we model the CAP arable crop regime using a dual approach that allows us to measure in terms of elasticities the response of production and land allocation decisions to the compensatory payments scheme. We apply this methodology to a data sample of crop farms in the North of Italy, within the transition period of the CAP reform. The estimated model allows us to measure, for the area considered, supply and land allocation responses to the recent “Agenda 2000” reform package, as well as to analyse its degree of decoupling.