Evaluation of the EU proposed farm income stabilisation tool by skew normal linear mixed models

Pigeon, Mathieu;Henry de Frahan, Bruno;Denuit, Michel
(2014) European Actuarial Journal — Vol. 4, n° 2, p. 383-409 (2014)

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Authors
  • Pigeon, MathieuUCLouvain
    Author
  • Henry de Frahan, BrunoUCLouvain
    Author
  • Denuit, MichelUCLouvain
    Author
Abstract
The European Commission has introduced new risk management tools in the rural development pillar 2 of the Common Agricultural Policy. One of them consists in providing co-financing support to mutual funds compensating farmers who experience a severe drop in their income. This paper analyses this income stabilisation tool for a region in Belgium by means of a skew normal linear mixed model. Relying on the farm accountancy data network, this analysis focuses on estimating the probability that such a fund would need to intervene and, in that case, the expected amount of each farm income compensation. The predictive distribution of future incomes given past revenues trajectory is derived and used for evaluation purposes. Particular attention is paid to additional requirements that could be imposed to the income stabilisation tool.
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Pigeon, M., Henry de Frahan, B., & Denuit, M. (2014). Evaluation of the EU proposed farm income stabilisation tool by skew normal linear mixed models. European Actuarial Journal, 4(2), 383-409. https://doi.org/10.1007/s13385-014-0097-9 (Original work published 2014)