Policy assessment of an EU wide flat area CAP payments system

Abstract

While the evolution of the Common Agricultural Policy (CAP) until 2013 is clear, European Union (EU) budgetary pressures and the perceived unfairness of the distribution of CAP support across Member States has lead to uncertainty over the design of the CAP post 2013. One comprehensive reform option being considered is the implementation of an EU wide flat area payment (EUWFAP) system and a reduction of the total budget available for direct payments. It is hypothesized that the implementation of this policy proposal would lead to significant changes in the distribution of the EU budget and to the redistribution of agricultural production between the Member States, which could hinder the implementation of the proposal. This paper evaluates the rationality of the EUWFAP, based on the analysis of its budgetary and market impacts. Using the AGMEMOD 2020 combined model, the introduction of the EUWFAP in 2013 is compared with a baseline continuation of the current policy. Results suggest that there would be minor negative impacts on the agricultural production at the EU level, but that more substantial impact for some commodities, most notably beef, could occur in the individual EU Member States. An important outcome of such a policy reform would be a substantial change in the budget allocation between Member States, which could help mitigate the budgetary tensions between the Member States.

The Common Agricultural Policy and the Increased Competitiveness of Spanish Regional Agriculture

“…However, its effects would be highly significant for certain regions and production systems, as in each MS the regions would benefit that historically have received the lowest average payments per hectare, and between States there would be a transfer of funds from the EU-15 to the EU-12. Other studies on the overall European situation have reached similar conclusions (Velázquez, 2008;Zahrnt, 2009;Erjavec et al, 2011;Gocht et al, 2011).…”

Post-2013 EU Common Agricultural Policy, Trade And Development:

“…Redistribution of payments on its own would thus be expected to have a negative effect on EU production. Recent studies support this intuition but suggest that the effects will be very marginal, in most cases less than 1-2% (Erjavec et al, 2011;Gocht et al, 2011). The effects are somewhat larger for cereals than for livestock but still rather small.…”

“…But there is widespread agreement (see footnote 11) that even decoupled direct payments do have an effect on production, even if there is less agreement on how strong this effect is in practice. There are now a number of studies which attempt to quantify the effects of redistribution in the EU (Erjavec et al, 2011;Gocht et al, 2011). The general message from these studies is that the production (and thus trade) effects are likely to be small, but that the distributional effects across and within countries could be significant.…”

Agricultural franchising and contribution to achieving objectives of the EU common agricultural policy

“…The Common Agricultural Policy is a significant budgetary policy of the EU, which is fully established at the EU level and mainly financed from the EU budget (Erjavec et al, 2011). Because of high spending for CAP from the budget, it is often a stumbling block in making European budget.…”