How Does the Farmer Strike a Balance between Income and Risk across Inputs? An Application in Italian Field Crop Farms

The European Union’s Farm-to-Fork strategy, aiming at increasing the environmental sustainability of farming, is oriented to limit farm inputs that could harm environment. This restrictive policy affects farmers’ productive choices and economic well-being. However, limited attention has been paid how this affect risk farmers face. To do so, we examine affected by fertilisers, crop protection, irrigation water, labour choices. study relied on Antle’s method moments applied irrigated field farms Italian Farm Accountancy Data Network from 2008 2019. paper fills literature gap jointly using three aspects usually adopted separately. First, consider semi-variance investigate risks strategies. Second, it accounts also for government payments relationship between these risk. Finally, adopts an estimation strategy relies Generalised Method Moments (GMM) first step Fixed Effects-Generalized Least Squared (FE-GLS) estimator second, considering time individual fixed effects interaction terms effects. According our research, constraining water increases income variability, causing farming be potentially riskier. restricting fertilisers protection use decreases downside These results indicate measures input use, such as those foreseen in EU, strongly influence extent type Therefore, policymakers should evidence when designing policies.