Disaggregated Impacts of CAP Reforms

Proceedings of an OECD Workshop

image of Disaggregated Impacts of CAP Reforms

The Common Agricultural Policy (CAP) is an important policy for the European Union and accounts for about 40% of the EU budget. Ever since its inception in 1958, the CAP has been regularly reviewed and adjusted to improve its performance and adapt to changing circumstances. At a time when the post-2013 future of the CAP is being discussed and major challenges such as food security and climate change lay ahead, it is important to review the impact of past reforms and to draw lessons for the design of future policies.

While the studies in these proceedings often take account of national and international market effects of agricultural policies, they tend to focus on the impact of policies on farms and at the regional and local levels. Today, the European Union is composed of very diverse regions that are affected very differently by any given farm policy, depending on the structural characteristics of the farms’ and regions’ economies.

This report collects papers presented at the OECD Workshop on Disaggregated Impacts of CAP Reforms, held in Paris in March 2010, which focused on recent reforms. In particular, it examined the implementation of the single payment scheme since 2005 and the transfer of funds between different measures. Special attention was also paid to reforms of the sugar and dairy sectors with respect to the quota system and the restructuring of both these industries. The papers also look at the impact of the new direct payment system on land use, production and income.


The impact of SPS implementation options on the distribution of support

This chapter uses the example of France and Germany and data from the EU FADN to project the distributional effects of the Single Payment Scheme (SPS) based on historical or regional references. For Germany, the principles of the hybrid and regional models are described and their effects on the distribution of direct payments, production and income by region, farm and farm size are estimated. The period 2004-13 is characterised by significant transfers of entitlements, from intensive beef fattening and dairy farms to extensive, grazing cattle farms, as well as a moderate regional redistribution in favour of regions with natural handicaps. Differences occur depending on farm size. The analysis of income developments over 2004-09 suggests some influence of SPS developments on income up to 2007, but as of 2008 changes in income levels are mainly driven by price developments, with larger farms appearing to adjust better to price decreases than smaller ones. Finally, a brief outline is given about the effects of possible alternative options of direct payments at the European Union level.


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