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Hill farming in UK is experiencing very difficult economic circumstances and many farmers rely onsubsidies provided by the government for a large fraction of their income. The Peak District NationalPark is used as a case study to examine how farmers might respond to current policy changes � inparticular, the move from area- and headage-based payments to the Single Farm Payment, and howoptimal business plans should respond to these changes. The objective of this paper is thus to developproduction models that predict how farmers will respond to changing policy framework conditions.For this purpose socio-economic surveys were carried out on 44 sample farms, in order to investigatehow the land is managed on hill farms including ongoing policies and future farm managementplanning. Based on these surveys a series of representative farm linear programming models wasdeveloped, which represent typical farm types in the uplands in the Peak District. In this study thefocus is on typical sheep and beef farm type, the most common in this region. This model is used tocalculate the effect of different policies, carried out under CAP reform, on incomes, land use and theintensity of production. We also consider the impacts of a complete removal of subsidy.
