Farmers’ Intention towards Energy Crops Adoption under Alternative Common Agricultural Policy.

An Empirical Analysis in Andalusia (Spain).

Giacomo Giannoccaro(a)*; Julio Berbel(b); Angela Barbuto(a); Antonio Baselice(a); Pasquale Marcello Falcone(a)

(a) STAR* Agro-Energy Group, University of Foggia(b) University of Cordoba

E-mail giacomo.giannoccaro@unifg.it; Tel. +39 0881 338 422

17th ICABR ConferenceRavello (Amalfi Coast – Italy):

June 18 - 21, 2013

INNOVATION AND POLICY FOR THE BIOECONOMY

1

Outline

Background

Aim of research

Materials and Methods

Results

Discussion

Background

1

Background Renewable energy production is central in EU policy

debate one of the core issues in European Union (EU) Bio-economy strategy

(European Commission, 2010). Agricultural sector

main potential provider of raw materials for bio-energy production

Despite growing interest, renewable energy covers a small share European energy market

Several policy instruments implemented by EU members

i.e. investment subsidies, fuel tax, rebates, renewable fuel mandates and feed-in tariffs

CAP represents the main policy drivers of agricultural sector and may be of energy production within the second pillar, several policy instruments are developed to

promote on-farm energy production

Energy consumption in Spain

Hydraulic 2.74%

Wind 2.83%

Biomass 3.51%

Biogas 0.17%USW 0.14%Biofuel 1.09%Geothermal 0.00%Solar 0.75%

Nuclear

Renewable Energy

Fuel

Carbon

Natural gas

Renewable Energies Plan 2005-2010, has fixed the objective of covering 12% of the primary energy consumption

Source: IDAE, 2010

Focusing on Southern Spain

Potential sources of Biomass in the Southern Spain

Source: Adaptated from Energy Agency of Andalusia (2010)

Potential biomass energy production is estimated of 3 958 Ktoe/year.In 2010 the primary energy consumption in the region was 18 555 Ktoe,Therefore biomass energy could cover 21.3 % of energy demand.Currently it accounts for 6.2 %

Current biomass plants in the Southern Spain

Source: Adaptated from Energy Agency of Andalusia (2010)

Power plants installed in Andalusia convers 40% of national power from biomass

Remarking… Potential energy production from biomass is very

high in the region Installed biomass plants (i.e. power potentiality) is

satisfactory, but current energy production is below of regional potentiality

Main problems refer to biomass supply: Mostly, plants are feed-in by olive pits (peak period,

storage expenditure) The lack of a real market for biomass (i.e. energy crops

still at experimental level) The key challenge for plants remains security of

feedstock supply Farmers’ preferences are a key constraint to potential

adoption

Aim of research

2

Objectives

To analyse farmers’ intentions towards on-farm adoption of energy crops under alternative CAP scenarios

To identify determinants of the adoption under alternative Policy scenarios

Materials and Methods

3

Methodology

Stated intentions on adoption of energy crops under two different scenarios

Scenario 1: Baseline (current CAP until next ten years) Scenario 2: NO_CAP (complete abolishment of CAP

after 2013)

Identification of determinants of energy crops adoption through probit model Model A – adoption under baseline Model B – adoption under NO_CAP scenario

Survey rationale

Survey time 2009

CAP liberalizati

on

Baseline

Role of policy

Farmer’s stated behavior

2013 2020

Would you adopt on-farm energy crops?

Would you keep on the farm activity?

Sample description

201 interviewees

Econometrics regression Farmer’s Decision= f (n1, n2, …, nn) Probit regression= the probability of adoption as

compared to the no adoption behavior

Determinants (n) Expected influence

(+/-)

Literature references

Farm features

Size of farmland + Bartolini and Viaggi (2012); Giannocaro and Berbel (2012)

(Without) Off-farm job + Keelen et al., 2009

Tipology of crop specialization

+ (Arable crops)- (Permanent)

Bartolini and Viaggi (2012); Lychanaras and Schneider (2011)

Farmer’s features

Farmer’s age - (Rogers, 1995)

Farmer’s education + Breustedt et al. (2008)

Policy drivers

SFP/SAPS payments ÷ Literature still scarce

Other payements ÷ Literature still scarce

Results

4

Farmers’ stated intention

Change in farmer’s behavior

Farmer's choice Baseline Reject Adoption Do not know Do not answer Exit Total

CA

P li

bera

liza

t. Reject 64 1 - - - 65

Adoption 2 18 - - - 20 Do not know - - 1 - - 1

Do not answer - - - 1 - 1 Exit 55 14 - - 45 114

Total 121 33 1 1 45 201 Source: own elaboration

Afected category= Farmer’s behavior would change if the CAP was abolished

Unafected category= Their behavior would not change whatever the policy in place

General overview Farmer’s reponse towards on-farm adoption

Farmer’s choice Baseline CAP liberalization

obs. freq. obs. freq.

Adoption 33 21.2% 20 23.0% Rejection 121 77.6% 65 74.7% Do not know 1 0.6% 1 1.1% Do not answer 1 0.6% 1 1.1%

Total 156 100% 87 100%

Source: own elaboration

Probit model: Adopters under Baseline scenario

Variables Coef. Std. Err. z P>|z|

Land_owned .002603 .0014968 1.74 0.082* Land rent IN .1300475 .3069307 0.02 0.983 (no) Worker part-time .930578 .3250464 2.86 0.004*** Specialization

COP 1.173804 .5867408 2.00 0.045** Field crops 1.04947 .5448866 1.93 0.054*

Other permanent .8644702 .6370627 1.36 0.175 Livestok&crops -.8270201 1.140229 -0.73 0.468

Altitude .0150728 .6907637 0.02 0.983 Age group

41-65 years -.4656088 .3591141 -1.30 0.195 > 66 years -1.350149 .7080917 -1.91 0.057*

Education Primary school 1.129196 .8949341 1.26 0.207

High school -.353109 .420223 1 -0.84 0.401 Professional master .4283212 .4391684 0.98 0.329

Degree/Ph.D. .9629448 .5448019 1.77 0.077* SFP/SAPS .0004803 .000409 1.17 0.240

Constant -2.062376 .6865826 -3.00 0.003** Pseudo R2 = 0.35

Significance at 90%, 95% and 99% respectively with (*), (**) and (***)

SFP/SAPS payments and other related CAP policy show no significance

Results are in line with literature of innovation adoption

Source: own elaboration

Probit model: Adopters under CAP liberalization

Variables Coef. Std. Err. z P>|z|

Land rent IN -.4629982 .5136357 -0.90 0.367 Land MA

8-24 .8580442 .8018108 1.07 0.285 24-64 1.248007 .8505328 1.47 0.142

>64 1.784906 .9532452 1.87 0.061* (no) Worker part-time 2.02511 .6708409 3.02 0.003*** Specialization

COP .2579961 .8812532 0.29 0.770 Field crops -.6715304 .9423655 -0.71 0.476

Other permanent -.0260326 .9230747 -0.03 0.978 Livestok&crops .4767835 1.265312 0.38 0.706

Altitude -.9772564 .8936531 -1.09 0.274 Age group

41-65 years -.7594926 .6189643 -1.23 0.220 > 66 years -.3356613 .7393703 -0.45 0.650

SFP/SAPS -.0003836 .0013814 -0.28 0.781 AES 1.311596 .6483546 2.02 0.043**

Constant -2.698901 1.103362 -2.45 0.014** Pseudo R2 = 0.54

Significance at 90%, 95% and 99% respectively with (*), (**) and (***)

Source: own elaboration

Size of farm land and off-farm job factors are also significant

Farms engaged in AES show major likelihood to adopt

Discussion

5

Main points

For the case study of Andalusia it seems that CAP payments will not affect farmer decision towards energy crops adoption

Main CAP influence is related to the farmer’s decision of continuing with farming activity after 2013 (indirect land use change)

Determinants such as farmer’s age and education, size of farmland, arable farming systems are in line with the innovation adoption literature

Due to the size of sample findings should be considered as preliminary results

Farmers’ Intention towards Energy Crops Adoption under Alternative Common Agricultural Policy.

An Empirical Analysis in Andalusia (Spain).

Giacomo Giannoccaro(a)*; Julio Berbel(b); Angela Barbuto(a); Antonio Baselice(a); Pasquale Marcello Falcone(a)

(a) STAR* Agro-Energy Group, University of Foggia(b) University of Cordoba

E-mail giacomo.giannoccaro@unifg.it; Tel. +39 0881 338 422

17th ICABR ConferenceRavello (Amalfi Coast – Italy):

June 18 - 21, 2013

INNOVATION AND POLICY FOR THE BIOECONOMY

24