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Can the CAP payments facilitate the growth of individual farms in the NMS post-EU accession?

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  • Latruffe, Laure
  • Davidova, Sophia
  • Douarin, Elodie
  • Gorton, Matthew

Abstract

The impact of the introduction of the EU Single Area Payments (SAP) on farm strategy is investigated for a sample of Lithuanian farms, utilising farm accounting and survey data. The applications of two investment models demonstrate that the credit market in Lithuania was imperfect prior to accession and that some farms were financially constrained. The introduction of the SAP has a significant, positive influence on farmers’ intentions to expand their farm area compared to a baseline scenario of the continuation of pre-accession policy. The switch in policy has a more pronounced effect on farms that were previously credit constrained. While the SAP has been presented as a policy support that is decoupled from production, its introduction will nevertheless have ex post coupled effects, most notably an income multiplier effect on credit constrained farmers.

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Bibliographic Info

Paper provided by Agricultural Economics Society in its series 82nd Annual Conference, March 31 - April 2, 2008, Royal Agricultural College, Cirencester, UK with number 36861.

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Date of creation: 30 Mar 2008
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Handle: RePEc:ags:aes008:36861

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Keywords: Single Area Payments (SAP); Common Agricultural Policy (CAP); credit; Lithuania;

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