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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.

Suggested Citation

  • Zahrnt, Valentin, 2009. "Public Money for Public Goods: Winners and Losers from CAP Reform," ECIPE Working Papers 51300, European Centre for International Political Economy (ECIPE).
  • Handle: RePEc:ags:ecipwp:51300
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    File URL: http://purl.umn.edu/51300
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    References listed on IDEAS

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    1. Nancy H. Chau & Harry de Gorter, 2005. "Disentangling the Consequences of Direct Payment Schemes in Agriculture on Fixed Costs, Exit Decisions, and Output," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(5), pages 1174-1181.
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    Cited by:

    1. 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.
    2. repec:ers:journl:v:xx:y:2017:i:3b:p:655-665 is not listed on IDEAS
    3. Galluzzo, Nicola, 2015. "Analysis of impact of rural development subsides on cropping specialization in Bulgaria and Romania using FADN data," 150th Seminar, October 22-23, 2015, Edinburgh, Scotland 212659, European Association of Agricultural Economists.
    4. 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.
    5. 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.
    6. Popp, Jozsef & Jambor, Attila, 2014. "On the consistency of CAP measures: Will European agriculture meet the challenges it faces?," 142nd Seminar, May 29-30, 2014, Budapest, Hungary 169087, European Association of Agricultural Economists.
    7. 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.
    8. 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 Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 65, number 65.
    9. 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.
    10. repec:ers:journl:v:xx:y:2017:i:4a:p:684-695 is not listed on IDEAS
    11. 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.
    12. Andreea-Emanuela Drǎgoi, 2016. "Financing the European Agriculture: A Comparative Approach across the Member States," Global Economic Observer, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences;Institute for World Economy of the Romanian Academy, vol. 4(1), pages 13-22, May.
    13. Brian Ó Caithnia, 2011. "Compounding Agricultural Poverty: How the EU’s Common Agricultural Policy is Strangling European Recovery," Chapters,in: Institutions in Crisis, chapter 11 Edward Elgar Publishing.
    14. David Howden (ed.), 2011. "Institutions in Crisis," Books, Edward Elgar Publishing, number 14370, April.
    15. 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.
    16. Poczta, Walenty, 0. "Wspólna Polityka Rolna Ue Po 2013 Roku – Uzasadnienie, Funkcje, Kierunki Rozwoju W Kontekście Interesu Polskiego Rolnictwa," Village and Agriculture (WieÅ› i Rolnictwo), Polish Academy of Sciences (IRWiR PAN), Institute of Rural and Agricultural Development, issue 3.
    17. 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.
    18. 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.
    19. 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.

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    Keywords

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

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