AP - Cap Reform Policy Alternatives And Farm Decisions’ Optimization - The Case Of Slovenia

The 2003 reform of Common agricultural policy to be implemented in Slovenia in 2007 could have significant impact on the economic position of some agricultural sectors in Slovenia. Out of economics sight one can expect a drastic impact especially in sectors like beef, where percentage of pre-reform production coupled direct payments was very high - up to 70 % of gross margin achieved. This leads farmers to seek new production plans. For this purpose detailed specified static linear programming model has been developed and applied to the hypothetical agricultural holdings in order to find optimal production plans by maximizing total gross margins. Model results confirm that the reform should have unfavourable impacts on farms with intensive production practice, especially those with high livestock density. Obtained results indicate that the negative impacts can be mitigated by combining different production activities and technologies under given constraints on resources available. Model results also confirm the growing importance of CAP rural development payments, among them particularly inclusion into agri-environmental measures.

Keywords: CAP reform, farm decision making process, linear programming, Slovenia.