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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
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    References listed on IDEAS

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    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.

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