De-coupling was introduced to the CAP became a notable change in policies for the agricultural sector by separating subsidy from "production" or "land areas". Coupling had caused the CAP, for example, to degenerate into a form of rural dole where achievable income from subsidies provided little incentive for investment to improve productivity. In many cases there were examples of "backward sloping supply curves" indicating that crops and actvities were arranged to secure some target minimum income level.
Policies that are based on de-coupling cause the farming community to be more exposed to "market requirements" both in terms of product quality and unit prices that consumers are likely to pay.
Under such circumstances it is important for the farmer associatuions and govenrment to have data to be able to review the economic and financial viability of different levels of productivity for crop and livestock enterprises. The data series providing this information can only be collected on the basis of sample surveys involving farm visits and collecting annual variable input quantities and values for each enterprise, yields achieved, unit prices, revenues and Gross Margins
The comparison of yields, over time, provides the foundation for all other data in the series.
The benchmaking analysis that establishes three or more recognizable levels of performance is used to determine the technical packages associated with the most sustainable production Sustainability is assessed in terms of income, productivity and conservation of the environment and the ecosystem it supports.
Gross Margins are used to compare the relative contributions of different enterprises to the income of a farm. The viability of a production unit not only depends upon the GMs but also on the land resources available (land area of the unit). This information needs to be assessed in collaboration with farmers and extension agents.
1 An enterprise is a specific production activity on a farm such as soybeans, corn, alfalfa, beef or milk.
2 variable inputs incluse such inputs as seed, fertilizer, labour hours, fuel, pesticides and machine time. These varu with scale of production (area of production or number of animals)