Bridging the Gap: The Impact of Compensatory Measures on Mountain Farming in Piedmont

This study examines the impact of the Rural Development Program (RDP) on reducing income disparities between farms in mountainous and non-mountainous areas in Piedmont, Italy. Using Farm Accounting Data Network data from 2012–2022, the analysis focuses on cattle, sheep and goats, and fruit farms, with 562 farms (3,557 observations; 39% in mountainous areas). A pooled multivariate regression assesses income disparities excluding RDP support, RDP’s effectiveness in mitigating gaps, and the role of compensatory allowance. Findings reveal that significant income disparities are limited to cattle farms, where mountain farms experience a net shortfall of €25,506 on average. RDP support reduces 26.56% of this gap, with compensatory allowance contributing 66.68% of the reduction. Other RDP measures account for the remaining 33.32%. However, much of the gap persists; doubling compensatory allowance payments to €206/ha would be required to eliminate the disparity.