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Public Money for Public Goods: Winners and Losers from CAP Reform

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  • Zahrnt, Valentin

Abstract

To attain fundamental reform of the post-2013 Common Agricultural Policy (CAP), a serious debate is needed in 2009/10 that prepares the decisions to be taken in 2011/12. The paper contributes to this debate, first, by arguing that the Single Farm Payment should not become the mainstay of the future CAP but be gradually phased out. Second, it proposes that the existing two-pillar structure of the CAP should be replaced by a public goods pillar (containing all efficient policies to be preserved) and a discretionary pillar (encompassing all inefficient policies to be removed over time). This would give member states flexibility in how they phase out inefficient policies, while the EU reform agenda would not be clogged with the contentious details of their progressive removal. Third, the paper assesses the criteria likely to guide future allocation of CAP payments, such as GDP per capita, agricultural and forest areas, and areas with Natura 2000 status. Fourth, it estimates member states’ share in total CAP payments under different post-2013 scenarios. This reveals surprising differences between the negotiating positions that countries traditionally adopt and the payment receipts they can expect from reform.

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Bibliographic Info

Paper provided by European Centre for International Political Economy (ECIPE) in its series ECIPE Working Papers with number 51300.

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Date of creation: Jun 2009
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Handle: RePEc:ags:ecipwp:51300

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Related research

Keywords: CAP; subsidies; budget review; Agricultural and Food Policy; Political Economy;

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References

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  1. Chau, Nancy H. & de Gorter, Harry, 2001. "Disentandling the Consequences of Direct Payment Schemes in Agriculture on Fixed Costs, Exit Decisions and Output," Working Papers 127663, Cornell University, Department of Applied Economics and Management.
  2. Grethe, Harald, 2007. "High animal welfare standards in the EU and international trade - How to prevent potential `low animal welfare havens'?," Food Policy, Elsevier, vol. 32(3), pages 315-333, June.
  3. James Vercammen, 2007. "Farm bankruptcy risk as a link between direct payments and agricultural investment," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 34(4), pages 479-500, December.
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Citations

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Cited by:
  1. Sahrbacher, Amanda, 2012. "Impacts of CAP reforms on farm structures and performance disparities: An agent-based approach," Studies on the Agricultural and Food Sector in Central and Eastern Europe, Leib­niz Institute of Agricultural Development in Central and Eastern Europe (IAMO), volume 65, number 65.
  2. Monteleone, Alessandro & Pierangeli, Fabio, 4. "The reform of the CAP post-2013: allocation criteria in the second pillar," Politica Agricola Internazionale - International Agricultural Policy, Edizioni L’Informatore Agrario, issue 4.
  3. Vanni, Francesco & Cardillo, Concetta, 3. "The effects of CAP greening on Italian agriculture," Politica Agricola Internazionale - International Agricultural Policy, Edizioni L’Informatore Agrario, issue 3.
  4. Fabrizio De Filippis & Roberto Henke, 2010. "Cap Between First and Second Pillars: Looking into EU Spending on Agriculture," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 3, September.
  5. Harvey, David R. & Jambor, Attila, 2011. "What role for public goods in the future of CAP?," 85th Annual Conference, April 18-20, 2011, Warwick University, Coventry, UK 108957, Agricultural Economics Society.
  6. Salvioni, Cristina & Ascione, Elisa & Henke, Roberto, 0. "Structural and economic dynamics in diversified Italian farms," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), issue 3.
  7. Niculescu Oana-Marilena, 2012. "Common Agricultural Policy Post-2013 In The View Of Romania And France," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 144-149, July.
  8. Callan, Tim ed. & Barrett, Alan & Goggin, Jean & Gorecki, Paul K. & Keane, Claire & Kearney, Ide & Matthews, Alan & Walsh, John R., 2009. "Budget Perspectives 2010," Research Series, Economic and Social Research Institute (ESRI), number RS12.
  9. Alexandri, Cecilia, 2013. "Evaluating The Impact Of Future Common Agricultural Policy Options On Farm Incomes And Agricultural Supply," Agricultural Economics and Rural Development, Institute of Agricultural Economics, vol. 10(1), pages 31-49.
  10. Kleinhanss, Werner, 2011. "Impacts of the flat rates and digressive schemes on the distribution of Direct Payments in the EU," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114754, European Association of Agricultural Economists.
  11. Rong-Gang, Cong & Mark, Brady, 2012. "How to Design a Targeted Agricultural Subsidy System: Efficiency or Equity?," MPRA Paper 42481, University Library of Munich, Germany.

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