Testing for Structural Changes in the European Union’s Agricultural Sector

Abstract

Over recent decades several European and global occurrences have had an impact on the European Union’s economic sectors, and subsequently on farms. In fact, the various Common Agricultural Policy (CAP) reforms, namely those since 1992, and the global financial and economic crises, specifically after 2008, seem to have had several effects on the dynamics of the entire European Union agricultural sector and on the performance of farms. However, there is doubt as to whether these events were enough to promote structural breaks in European Union farms. In this way, the main objective of this study is to analyse both the known and unknown structural breaks in European farms, between 1989 and 2016. To this purpose, data from the Farm Accountancy Data Network (FADN) from the twelve former member-states (the countries with the longer time series) and methodologies based on the Chow test and on the Quandt likelihood ratio (QLR) were considered. The results show that the structural breaks are different across the several twelve former European Union countries and among the several variables considered. In any case, the financial and economic crises, as well as changes in the European Union’s methodologies relative to statistical information, seem to have had a greater impact on the European farms than the several CAP reforms (with the exception of the reform of 1992 the trade liberalization). However, the several consequences of all these European and world events on European farms seem to be delayed for some years.