THE EFFECT OF INCOME STABILISATION TOOL ON SLOVAK AGRICULTURE
THE EFFECT OF INCOME STABILISATION TOOL ON SLOVAK AGRICULTURE

Author(s): Andrea Bahačikova, Tatiana Bencova, Zuzana Kapustova
Subject(s): Social Sciences, Economy
Published by: Udruženje ekonomista i menadžera Balkana
Keywords: Income risk; income stabilisation; CAP; Slovak agriculture.
Summary/Abstract: Managing income risk in agriculture is one of the important issues for farmers and policy makers nowadays. There exist a set of instruments and mechanisms for farmers to face the income volatility, including the individual or public support. Under II Pillar, the Common Agricultural Policy (CAP) offers the support for less favoured farms in the way of insurance, mutual fund, and Income stabilisation tool. The Income Stabilisation Tool (IST) represents the compensation to farmers for a “severe drop” in income, if the farm experienced an income loss of more than 30% compared to the 3-years average or the Olympic average of the preceding five-year income realizations. However, none of the EU countries has been currently using the tool operationally. The main objective of the paper is to investigate the potential effect of the Income Stabilisation Tool on mitigation of income risk in Slovak agriculture. The results of the paper show the existing possibility to improve financial situation and reduce the income inequality of particular Slovak farms in the future.

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