Analysis Of The Effects In Italy Of Alternative Hypotheses Of Regionalization Of The Single Payment Scheme

The Fischler reform of the CAP deepened the decoupling process of agricultural support started with the 1992 reform, introducing the Single Payment Scheme (SPS). Two models could be used to apply the SPS: in the historic model payments are based on individual reference amounts; in the regional model payments are based on regional reference amounts. Italy chose to apply the historic model, thus “freezing” the distribution of support to farms at the historic reference level. The recent Proposal on the Health Check of the CAP envisaged Member States being allowed to adjust their model towards a flatter rate of the SPS from 2010, a move that could become compulsory for Member States after 2013. The paper analyses the effects at territorial and farm level of the application of a flat rate payment in Italy as a replacement for the current payment based on the historic farm reference. The analysis makes it possible to assess and quantify the redistribution effects of alternative hypotheses of “regionalization”, highlighting how these effects, at farm and territorial level, are heavily dependent on the land use on the basis of which support was calculated in the reference period, by the criterion utilized to define “region”, as well as the percentage of regionalization chosen. The originality and significance of the work lies in the fact that, to the best of our knowledge, no similar works at farm level are currently available for Italy. The aim of the territorial analysis is to identify the amount of resources to be redistributed across different areas of Italy according to the definition of “region” adopted (administrative Regions, territorial ”macro-regions”, Italy as a whole) and the percentage of regionalization adopted (10%, 50%, 100%). The farm analysis is based on the 2006 Italian sample of FADN (Farm Accountancy Data Network) that contains, roughly, 14,000 farms. For each hypothesis the analysis has considered: the distribution of farms by class of the difference between payments (historic and simulated), to highlight the redistribution of support to farms in the “region” considered; the percentage of farms that gain/lose in excess of a certain amount of support; finally, the redistribution effects are also evaluated in terms of crop land uses. The analysis highlights the fact that the larger the “region” the greater are the redistribution effects. Moreover, as expected, these redistribution effects are more pronounced the wider the diversification of crop land uses, and, therefore, the support received in the historic reference period.