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Can the CAP payments facilitate the growth of individual farms in the New Member States post-EU accession?

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

Abstract

The impact of the introduction of EU Single Area Payments (SAP) on farm strategy in New Member States is investigated for a sample of Lithuanian farms, utilizing farm accounting and survey data. The application of two investment models demonstrates 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 European Association of Agricultural Economists in its series 2008 International Congress, August 26-29, 2008, Ghent, Belgium with number 43611.

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Date of creation: 2008
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Handle: RePEc:ags:eaae08:43611

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Keywords: Single Area Payments (SAP); Common Agricultural Policy (CAP); credit; Lithuania; Agricultural and Food Policy; Farm Management;

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