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Income Distribution Effects of EU Rural Development Policies: The Case of Farm Investment Support

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  • Ciaian, Pavel
  • Ratinger, Tomáš

Abstract

This paper analyses income distribution effects of investment support granted under the EU RDP. It shows that implementation details of the support (the size of allocated funds, enforcement of additionality, eligibility limits) and market conditions (farm heterogeneity, farm access to credit, short-run versus long-run effects) affect income distribution effect of farm the investment support. With certain implementation of the support farms may gain part or even full support (when the additionality is not enforced and the total support is relatively small), while under different conditions farmers may loose (with perfect enforcement of the additionally and with significant increase in capital price). The implementation details interact with market structure and also determine the income distribution effects of the investment support. Introducing minimum thresholds as eligibility criteria may deter small farms from uptaking the investment support while maximum eligibility threshold may restrict big farms to take desired level of support. Benefits from investment support are shared with capital suppliers. Gains of capital suppliers depend on the size of the capital supply elasticity and are conditional on the EU support to increase capital prices.

Suggested Citation

  • Ciaian, Pavel & Ratinger, Tomáš, 2009. "Income Distribution Effects of EU Rural Development Policies: The Case of Farm Investment Support," Conference papers 331905, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331905
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    More about this item

    Keywords

    Community/Rural/Urban Development; Agricultural and Food Policy;

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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