IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-02282245.html
   My bibliography  Save this paper

How the EU single farm payment should be modelled: lump-sum transfers, area payments or… something else ?

Author

Listed:
  • Frédéric Courleux

    (Ministère de l'Agriculture et de la Pêche)

  • Herve Guyomard

    (Économie et Sociologie Rurales - INRA - Institut National de la Recherche Agronomique)

  • Fabrice Levert

    (Économie et Sociologie Rurales - INRA - Institut National de la Recherche Agronomique)

  • Laurent Piet

    (Économie et Sociologie Rurales - INRA - Institut National de la Recherche Agronomique)

  • . Inra
  • . Société Française d'Economie Rurale

    (SFER - Société Française d'Economie Rurale)

Abstract

The 2003 Common Agricultural Policy (CAP) reform radically changes the way the European Union (EU) supports its agricultural sector by decoupling direct payments. Production is no longer required to get the payment attached to Single Farm Payment (SFP) entitlements. However, the new scheme maintains a specific link between payments and hectares; in addition, SFP entitlements can be exchanged among farmers. These features question the way SFP entitlements should be regarded, hence modelled, i.e., as lump-sum transfers, area payments or… something else. We develop a microeconomic analytical framework which shows that the answer crucially depends on the total number of entitlements which are initially made available relative to the number of hectares, more specifically the number of cultivated hectares in a zero support regime, the number of cultivated hectares in a policy support regime trough per-hectare direct aids, and the number of cultivated or idled hectares in a policy regime where support is granted through direct aids per hectare and production is not required.

Suggested Citation

  • Frédéric Courleux & Herve Guyomard & Fabrice Levert & Laurent Piet & . Inra & . Société Française d'Economie Rurale, 2007. "How the EU single farm payment should be modelled: lump-sum transfers, area payments or… something else ?," Post-Print hal-02282245, HAL.
    • Handle: RePEc:hal:journl:hal-02282245
    Note: View the original document on HAL open archive server: https://hal.science/hal-02282245v1
    as

    Download full text from publisher

    File URL: https://hal.science/hal-02282245v1/document
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Schmid, Erwin & Sinabell, Franz & Hofreither, Markus F., 2007. "Phasing out of environmentally harmful subsidies: Consequences of the 2003 CAP reform," Ecological Economics, Elsevier, vol. 60(3), pages 596-604, January.
    2. Bascou, Pierre & Londero, Pierluigi & Munch, Wolfgang, 2004. "Reform and Adjustment in the European Union: The 2003 Reform of the Common Agricultural Policy and Enlargement," IAPRAP\IATRC Summer Symposium, Adjusting to Domestic and International Agricultural Reform in Industrial Countries, June 6-7, 2004, Philadelphia, PA, 15769, International Agricultural Policy Reform and Adjustment Project (IAPRAP).
    3. Balkhausen, Oliver & Banse, Martin & Grethe, Harald & Nolte, Stephan, 2005. "Modelling the Effects of Partial Decoupling on Crop and Fodder Area And Ruminant Supply in the EU: Current State and Outlook," 89th Seminar, February 2-5, 2005, Parma, Italy 231832, European Association of Agricultural Economists.
    4. Binfield, Julian C.R. & Donnellan, Trevor & Hanrahan, Kevin F. & Hart, Chad E. & Westhoff, Patrick C., 2004. "CAP Reform and the WTO: Potential Impacts on EU Agriculture," 2004 Annual meeting, August 1-4, Denver, CO 20020, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Alexandre Gohin, 2006. "Assessing CAP reform: sensitivity of modelling decoupled policies," Post-Print hal-01931639, HAL.
    6. Søren E. Frandsen & Birgitte Gersfelt & Hans G. Jensen, 2003. "The Impacts of Redesigning European Agricultural Support," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 15(2), pages 106-131, July.
    7. Binfield, Julian C.R. & Westhoff, Patrick C. & Young, Robert E., II, 2003. "Reforming The Cap: A Partial Equilibrium Analysis Of The Mtr Proposals," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25856, International Association of Agricultural Economists.
    8. Jeroen Buysse & Bruno Fernagut & Olivier Harmignie & Bruno Henry de Frahan & Ludwig Lauwers & Philippe Polomé & Guido Van Huylenbroeck & Jef Van Meensel, 2007. "Farm-based modelling of the EU sugar reform: impact on Belgian sugar beet suppliers," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 34(1), pages 21-52, March.
    9. Huettel, Silke & Kleinhanss, Werner & Offermann, Frank, 2005. "Impacts of Decoupling and Milk Quota Trade on the French and German Dairy Sectors," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24731, European Association of Agricultural Economists.
    10. Giovanni Anania & Mary E.. Bohman & Colin A. Carter & Alex F. McCalla (ed.), 2004. "Agricultural Policy Reform and the WTO," Books, Edward Elgar Publishing, number 3471.
    11. Alexandre Gohin, 2006. "Assessing CAP Reform: Sensitivity of Modelling Decoupled Policies," Journal of Agricultural Economics, Wiley Blackwell, vol. 57(3), pages 415-440, September.
    12. Breen, James P. & Hennessy, Thia C. & Thorne, Fiona S., 2005. "The effect of decoupling on the decision to produce: An Irish case study," Food Policy, Elsevier, vol. 30(2), pages 129-144, April.
    13. Joe Dewbre & Jesús Antón & Wyatt Thompton, 2001. "The Transfer Efficiency and Trade Effects of Direct Payments," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(5), pages 1204-1214.
    14. Howard D. Leathers, 1992. "The Market for Land and the Impact of Farm Programs on Farm Numbers," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(2), pages 291-298.
    15. Gelan, Ayele & Schwarz, Gerald, 2006. "A Policy Impact Evaluation Model For Scotland: Decoupling Single Farm Payments," MPRA Paper 1491, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fabienne Femenia & Alexandre Gohin & Alain Carpentier, 2010. "The Decoupling of Farm Programs: Revisiting the Wealth Effect," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(3), pages 836-848.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Frédéric Courleux & Hervé Guyomard & Fabrice Levert & Laurent Piet, 2008. "How the EU Single Farm Payment should be modelled: lump-sum transfers, area payments or… what else?," Working Papers SMART 08-01, INRAE UMR SMART.
    2. Sahrbacher, Christoph, 2011. "Regional structural change in European agriculture: Effects of decoupling and EU accession," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 60, number 60.
    3. Viaggi, Davide & Raggi, Meri & Gomez y Paloma, Sergio, 2011. "Farm-household investment behaviour and the CAP decoupling: Methodological issues in assessing policy impacts," Journal of Policy Modeling, Elsevier, vol. 33(1), pages 127-145, January.
    4. Urban, Kirsten & Jensen, Hans G. & Brockmeier, Martina, 2016. "How decoupled is the Single Farm Payment and does it matter for international trade?," Food Policy, Elsevier, vol. 59(C), pages 126-138.
    5. Pierre Boulanger & Kirsten Boysen-Urban & George Philippidis, 2021. "European Union Agricultural Support ‘Coupling’ in Simulation Modelling: Measuring the Sustainability Impacts," Sustainability, MDPI, vol. 13(6), pages 1-17, March.
    6. Gelan, Ayele & Schwarz, Gerald, 2011. "Estimating the effects of single farm payments on multi-output agricultural production function," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 12(2).
    7. BOULANGER Pierre & PHILIPPIDIS George & URBAN Kirsten, 2017. "Assessing potential coupling factors of European decoupled payments with the Modular Agricultural GeNeral Equilibrium Tool (MAGNET)," JRC Research Reports JRC104276, Joint Research Centre.
    8. Thia C. Hennessy & Tahir Rehman, 2008. "Assessing the Impact of the ‘Decoupling’ Reform of the Common Agricultural Policy on Irish Farmers’ Off‐farm Labour Market Participation Decisions," Journal of Agricultural Economics, Wiley Blackwell, vol. 59(1), pages 41-56, February.
    9. 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), pages 1-24, April.
    10. Devadoss, Stephen & Gibson, Mark J. & Luckstead, Jeff, 2016. "The Impact of Agricultural Subsidies on the Corn Market with Farm Heterogeneity and Endogenous Entry and Exit," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 41(3), pages 1-20, September.
    11. Bhaskar, Arathi & Beghin, John C., 2007. "How Coupled are Decoupled Farm Payments? A Review of Coupling Mechanisms and the Evidence," Working Papers 7347, Iowa State University, Department of Economics.
    12. Genius, Margarita, 2013. "Production and Off-Farm Employment Decisions of Greek and Hungarian Farmers in the Light of the Last CAP Refrom," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 14(2), pages 1-16.
    13. Ferrari, Emanuele & Boulanger, Pierre & Gonzalez-Mellado, Aida & McDonald, Scott, 2014. "Revisiting Decoupled Agricultural Policies in CGE frameworks: Theory and Empirics," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170397, Agricultural and Applied Economics Association.
    14. Frederic Courleux & Herve Guyomard & Fabrice Levert, 2007. "Étude prospective sur le fonctionnement des marchés des droits au paiement et de la réserve nationale mis en place dans le cadre de la réforme de la PAC de juin 2003," Working Papers hal-01595356, HAL.
    15. Boere, Esther & van Kooten, G. Cornelis, 2015. "Reforming the Common Agricultural Policy: Decoupling Agricultural Payments from Production and Promoting the Environment," Working Papers 201653, University of Victoria, Resource Economics and Policy.
    16. Bakhshi, Samira & Kerr, William A., 2009. "Is There Supply Distortion In The Green Box? An Acreage Response Approach," Working Papers 51093, Canadian Agricultural Trade Policy Research Network.
    17. Halmai, Peter & Elekes, Andrea, 2005. "CAP Reform in the Light of the WTO Doha Round Negotiations," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24693, European Association of Agricultural Economists.
    18. Roeder, Norbert & Lederbogen, Dirk & Trautner, Juergen & Bergamini, Ariel & Stofer, Silvia & Scheidegger, Christoph, 2010. "The impact of changing agricultural policies on jointly used rough pastures in the Bavarian Pre-Alps: An economic and ecological scenario approach," Ecological Economics, Elsevier, vol. 69(12), pages 2435-2447, October.
    19. Tranter, R.B. & Swinbank, A. & Wooldridge, M.J. & Costa, L. & Knapp, T. & Little, G.P.J. & Sottomayor, M.L., 2007. "Implications for food production, land use and rural development of the European Union's Single Farm Payment: Indications from a survey of farmers' intentions in Germany, Portugal and the UK," Food Policy, Elsevier, vol. 32(5-6), pages 656-671.
    20. Röder, N. & Hennessy, T. & Stilmant, D., 2008. "Development of the utilization of pastrol land in the EU 25 after 2003," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 43, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-02282245. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.