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Assessing CAP Reform: Sensitivity of Modelling Decoupled Policies

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  • Alexandre Gohin

Abstract

The European Union reformed farm policy in June 2003 towards the decoupling of farm income support instruments. Available impact studies find that this reform reduces production incentives substantially for beef and to a lesser extent for arable crops. However, these studies assume that the previous reform, under Agenda 2000, already decoupled arable crop direct payments to a considerable extent, while beef premiums were linked more closely to production. Our main objective in this paper is to test the sensitivity of these results to this questionable modelling of Agenda 2000 direct payments, which neglects eligibility rules and land market imperfections. Our analysis reveals that the effects of the reform on both arable crop and beef production are always negative, however the Agenda 2000 direct payments are modelled. On the other hand, we show that, when the eligibility rules and land market imperfections are acknowledged, the production reducing effects may be much larger for arable crops than for beef. Policy implications of these results are noted. Copyright 2006 Blackwell Publishing Ltd.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Agricultural Economics.

Volume (Year): 57 (2006)
Issue (Month): 3 ()
Pages: 415-440

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Handle: RePEc:bla:jageco:v:57:y:2006:i:3:p:415-440

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Cited by:
  1. Frédéric Courleux & Hervé Guyomard & Fabrice Levert & Laurent Piet, 2008. "How the EU Single Farm Payment should be modelled: lump-sum transfers, area payments or… what else?," Working Papers SMART - LERECO, INRA UMR SMART 08-01, INRA UMR SMART.
  2. Mattas, Konstadinos & Arfini, Filippo & Midmore, Peter & Schmitz, P. Michael & Surry, Yves R., 2008. "Impacts Of Cap Reform On Rural Employment: A Multimodeling Cross Country Approach," 109th Seminar, November 20-21, 2008, Viterbo, Italy, European Association of Agricultural Economists 44801, European Association of Agricultural Economists.
  3. Mosnier, Claire & Ridier, Aude & Kphaliacos, Charilaos & Carpy-Goulard, Françoise, 2009. "Economic and environmental impact of the CAP mid-term review on arable crop farming in South-western France," Ecological Economics, Elsevier, vol. 68(5), pages 1408-1416, March.
  4. Tranter, R.B. & Swinbank, A. & Wooldridge, M.J. & Costa, L. & Knapp, T. & Little, G.P.J. & Sottomayor, M.L., 2007. "Implications for food production, land use and rural development of the European Union's Single Farm Payment: Indications from a survey of farmers' intentions in Germany, Portugal and the UK," Food Policy, Elsevier, Elsevier, vol. 32(5-6), pages 656-671.
  5. Roeder, Norbert & Lederbogen, Dirk & Trautner, Juergen & Bergamini, Ariel & Stofer, Silvia & Scheidegger, Christoph, 2010. "The impact of changing agricultural policies on jointly used rough pastures in the Bavarian Pre-Alps: An economic and ecological scenario approach," Ecological Economics, Elsevier, vol. 69(12), pages 2435-2447, October.
  6. Acs, Szvetlana & Armsworth, Paul R & Dallimer, Martin & Gaston, Kevin J & Hanley, Nicholas & Robertson, Philip & Wilson, Paul, 2008. "The effect of decoupling on marginal agricultural systems: implications for farm incomes, land use and upland ecology," Stirling Economics Discussion Papers, University of Stirling, Division of Economics 2008-18, University of Stirling, Division of Economics.
  7. Scardigno, Alessandra & Bazzani, Guido Maria, 2008. "An Integrated Territorial Simulation Model To Evaluate Cap Reform On Mediterranean Agriculture. Methodological Proposal And First Applications In Apulia Region (Southern Italy)," 109th Seminar, November 20-21, 2008, Viterbo, Italy, European Association of Agricultural Economists 44799, European Association of Agricultural Economists.
  8. Bakhshi, Samira & Kerr, William A., 2009. "Is There Supply Distortion In The Green Box? An Acreage Response Approach," Working Papers, Canadian Agricultural Trade Policy Research Network 51093, Canadian Agricultural Trade Policy Research Network.
  9. Sahrbacher, Christoph, 2011. "Regional structural change in European agriculture: Effects of decoupling and EU accession," Studies on the Agricultural and Food Sector in Central and Eastern Europe, Leib­niz Institute of Agricultural Development in Central and Eastern Europe (IAMO), volume 60, number 60.
  10. Pavel Ciaian & Maria Espinosa & Sergio Gomez y Paloma & Stephen Langrell & Kamel Louhichi & Thierry Vard & Thomas Heckelei & Paolo Sckokai & Alban Thomas, 2013. "Farm-household investment behaviour and the CAP decoupling: Methodological issues in assessing policy impacts," JRC-IPTS Working Papers JRC79969, Institute for Prospective and Technological Studies, Joint Research Centre.
  11. Niemi, Jyrki S. & Kerkela, Leena & Lehtonen, Heikki, 2008. "Modelling the impacts of multilateral agricultural trade liberalization on the EU," 2008 International Congress, August 26-29, 2008, Ghent, Belgium, European Association of Agricultural Economists 44334, European Association of Agricultural Economists.
  12. Jean-Christophe Bureau & Sébastien Jean, 2013. "Trade liberalization in the bio-economy: coping with a new landscape," Agricultural Economics, International Association of Agricultural Economists, vol. 44(s1), pages 173-182, November.
  13. Roeder, Norbert & Kilian, Stefan, 2008. "The Market for Payment Entitlements in Germany," 82nd Annual Conference, March 31 - April 2, 2008, Royal Agricultural College, Cirencester, UK, Agricultural Economics Society 36868, Agricultural Economics Society.
  14. Roeder, Norbert & Lederbogen, Dirk & Trautner, Juergen & Bergamini, Ariel & Stofer, Silvia & Scheidegger, Christoph, 2009. "The impact of changing agricultural policies on jointly used rough pastures in the Bavarian Pre-Alps - an economic and ecological scenario approach," 83rd Annual Conference, March 30-April 1, 2009, Dublin, Ireland, Agricultural Economics Society 51070, Agricultural Economics Society.
  15. Mesa-Jurado, Maria A. & Piston, Juan Maximo & Giannoccaro, Giacomo & Berbel, Julio, 2008. "Irrigation Water Value Scenarios for 2015: Application to Guadalquivir River," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain, European Association of Agricultural Economists 6450, European Association of Agricultural Economists.
  16. Bhaskar, Arathi & Beghin, John C., 2007. "How Coupled Are Decoupled Farm Payments? A Review of the Evidence," Staff General Research Papers 12841, Iowa State University, Department of Economics.
  17. Mittenzwei, Klaus & Britz, Wolfgang & Wieck, Christine, 2014. "Does the “green box†of the European Union distort global markets?," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), Italian Association of Agricultural and Applied Economics (AIEAA), issue 1, April.
  18. Moro, Daniele & Sckokai, Paolo, 2013. "The impact of decoupled payments on farm choices: Conceptual and methodological challenges," Food Policy, Elsevier, Elsevier, vol. 41(C), pages 28-38.
  19. Blanco, Maria & Garcia-German, Sol & Bardaji, Isabel, 2011. "El modelo de ayudas directas en la PAC post-2013: análisis de impactos de escenarios potenciales," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, Spanish Association of Agricultural Economists, vol. 11(2).
  20. Lelyon, Baptiste & Daniel, Karine & Chatellier, Vincent, 2008. "Decoupling and prices: determinant of dairy farmers’ choices? A model to analyse impacts of the 2003 CAP reform," 2008 International Congress, August 26-29, 2008, Ghent, Belgium, European Association of Agricultural Economists 44250, European Association of Agricultural Economists.
  21. Roeder, Norbert & Hennessy, Thia C. & Stilmant, Didier, 2007. "Development Of The Utilization Of Pastoral Land In The Eu 25 After 2003," 47th Annual Conference, Weihenstephan, Germany, September 26-28, 2007, German Association of Agricultural Economists (GEWISOLA) 7590, German Association of Agricultural Economists (GEWISOLA).

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