Assessing profitability in rice cultivation using the policy analysis matrix and profit-efficient data

Résumé

This paper assesses the profitability of rice farming in the Albufera, a protected wetland site located in Eastern Spain, under the post-2003 Common Agricultural Policy (CAP) policy scenario. The interest in analysing this agricultural system derives from its ability to produce positive externalities that can be regarded as public goods. The methodology combines the Policy Analysis Matrix (PAM) approach and Data Envelopment Analysis (DEA) techniques. Two policy matrices are computed using, respectively, observed and profit-maximising data on costs and revenues. Findings from observed data point to a lack of profitability, even when public support granted by the CAP to rice growers is considered, thus jeopardising the public goods provided by this agricultural system. The policy matrix with profit-efficient data shows that farmers could make positive profits, both at private and social prices. Our conclusion is that in order to maintain the non-marketable functions of rice farming in the Albufera, greater efforts should be done to extend the implementation of best practices among rice growers.