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The Economic Impact of allowing Partial Decoupling under the 2003 Common Agricultural Policy reforms on Scottish agriculture

Listed author(s):
  • Renwick, Alan W.
  • Jansson, Torbjorn
  • Thomson, Steven
  • Revoredo-Giha, Cesar
  • Barnes, Andrew Peter

The agreement to decouple EU direct farm payments from production and introduce the Single Payment Scheme (SPS) was formally made by the Council of Agricultural Ministers in June 2003. Due to concerns raised, the SPS provided Member States the scope to retain some coupled support and this option was taken up by some Member States but not others. Within the UK, Scotland was the only country to take advantage of Article 69 and pay a coupled payment for beef calves (under the Scottish Beef Calf Scheme). This paper, through using conceptual and empirical analyses, assesses whether and to what extent partial decoupling affected the single market and the effect that it had on the EU, member states and Scotland. The results of a modelling exercise (using the CAPRI model) highlight that production in coupled countries is higher than would be the case if they had decoupled, and this has subsequent impacts on other EU Member States through price and trade effects. This is particularly the case in the beef sector. Scottish producers would have been an estimated £31.6m pounds better off if all EU countries had fully decoupled under the reforms. This highlights that Scottish Agriculture was disadvantaged by the decision made in 2003 to allow partial coupling of payments. In addition, even though it would have led to the removal of the Scottish Beef Calf Scheme, beef producers would have been better off if full decoupling had been implemented and Article 69 measures not allowed.

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Paper provided by Scotland's Rural College (formerly Scottish Agricultural College), Land Economy & Environment Research Group in its series Working Papers with number 131461.

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Date of creation: 2011
Handle: RePEc:ags:srlewp:131461
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  1. Barry K. Goodwin & Ashok K. Mishra, 2005. "Another Look at Decoupling: Additional Evidence on the Production Effects of Direct Payments," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(5), pages 1200-1210.
  2. Barry K. Goodwin & Ashok K. Mishra, 2006. "Are “Decoupled” Farm Program Payments Really Decoupled? An Empirical Evaluation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(1), pages 73-89.
  3. Bhaskar, Arathi & Beghin, John C., 2009. "How Coupled Are Decoupled Farm Payments? A Review of the Evidence," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(1), April.
  4. Halmai, Peter & Elekes, Andrea & Velikovszky, Laszlo, 2006. "How Decoupled Is the European Union's Single Farm Payment?," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25339, International Association of Agricultural Economists.
  5. Rude, James, 2007. "Production Effects of the European Union’s Single Farm Payment," Working Papers 7335, Canadian Agricultural Trade Policy Research Network.
  6. Renwick, Alan W. & Revoredo-Giha, Cesar, 2008. "Measuring Cross-Subsidisation Of The Single Payment Scheme In England," 109th Seminar, November 20-21, 2008, Viterbo, Italy 44783, European Association of Agricultural Economists.
  7. Thia Hennessy & Fiona Thorne, 2005. "How Decoupled Are Decoupled Payments? The Evidence from Ireland," Working Papers 0501, Rural Economy and Development Programme,Teagasc.
  8. Paolo Sckokai & Daniele Moro, 2006. "Modeling the Reforms of the Common Agricultural Policy for Arable Crops under Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(1), pages 43-56.
  9. Serra, Teresa & Zilberman, David & Goodwin, Barry K. & Featherstone, Allen M., 2005. "Decoupling farm policies: how does this affect production?," 2005 Annual meeting, July 24-27, Providence, RI 19194, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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