This study evaluates the effectiveness of the Rural Development Program (RDP) in bridging the income gap between farms operating in mountainous and non-mountainous areas in Piedmont (Italy). Utilizing data from the Farm Accounting Data Network (FADN) covering the period from 2012 to 2022, the analysis focuses on three farming types: cattle; sheep and goats; and fruit. The sample comprises 562 farms, yielding a total of 3,557 observations, with 39% of them located in mountainous areas. A pooled multivariate regression model was employed to assess three key aspects: the existence of an income disparity between mountain and non-mountain farms excluding RDP’s support, the extent to which RDP’s support mitigates the income gap, and the proportion of this gap specifically addressed by the Compensatory Indemnity (CI). The results indicate that a significant gap is not uniformly evident across all farming types. A statistically significant and negative income gap exists only for farms specialized in cattle, with an average shortfall of 25,506 € for mountain farms, net of all RDP support. The RDP bridges approximately 26.56% of this gap, with CI covering 66.68% of the bridged portion, while the remaining 33.32% is addressed by other RDP measures not specifically targeting the income disparity between mountain and non-mountain farms. Despite the contributions from CI and other RDP’s supports, a substantial portion of the income gap remains unaddressed. To fully bridge the gap, the CI contribution would need to more than double.
Moino et al. (Thu,) studied this question.