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The 2003 CAP reform: Do decoupled payments affect agricultural production?

Author

Listed:
  • Peter Howley

    (Rural Economy and Development Programme, Teagasc, Athenry, Co. Galway, Ireland)

  • Trevor Donnellan

    (Rural Economy and Development Programme, Teagasc, Athenry, Co. Galway, Ireland)

  • Kevin Hanrahan

    (Rural Economy and Development Programme, Teagasc, Athenry, Co. Galway, Ireland)

Abstract

The move from coupled payment policy instruments to payments that are decoupled from production have made estimating future trends in agricultural output much more challenging. Using a dynamic multi product partial equilibrium model, the overall aim of this paper is to examine the potential supply inducing effect of decoupled payments. This issue is important in the context of WTO negotiations, and, in particular, in discussions surrounding the appropriateness of decoupled payments being included as a ‘green box’ policy. The results suggest that farm operators, to a large extent, do not treat these payments as fully decoupled and they do in fact maintain a strong supply inducing effect on agricultural production. Findings suggest, however, that this trade distorting effect is less than previously coupled payments.

Suggested Citation

  • Peter Howley & Trevor Donnellan & Kevin Hanrahan, 2009. "The 2003 CAP reform: Do decoupled payments affect agricultural production?," Working Papers 0901, Rural Economy and Development Programme,Teagasc.
    • Handle: RePEc:tea:wpaper:0901
    as

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    File URL: http://www.teagasc.ie/rural-economy/downloads/workingpapers/09wpre01.pdf
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    References listed on IDEAS

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    Cited by:

    1. Murphy, Geraldine & Meredith, David, 2015. "A typology of cattle farmers in Ireland: An overview of data, method and indicators," 2015 Conference, August 9-14, 2015, Milan, Italy 212518, International Association of Agricultural Economists.

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