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The 2003 CAP reform: Do decoupled payments affect agricultural production?

Author

Listed:
  • Peter Howley

    () (Rural Economy and Development Programme, Teagasc, Athenry, Co. Galway, Ireland)

  • Trevor Donnellan

    (Rural Economy and Development Programme, Teagasc, Athenry, Co. Galway, Ireland)

  • Kevin Hanrahan

    (Rural Economy and Development Programme, Teagasc, Athenry, Co. Galway, Ireland)

Abstract

The move from coupled payment policy instruments to payments that are decoupled from production have made estimating future trends in agricultural output much more challenging. Using a dynamic multi product partial equilibrium model, the overall aim of this paper is to examine the potential supply inducing effect of decoupled payments. This issue is important in the context of WTO negotiations, and, in particular, in discussions surrounding the appropriateness of decoupled payments being included as a ‘green box’ policy. The results suggest that farm operators, to a large extent, do not treat these payments as fully decoupled and they do in fact maintain a strong supply inducing effect on agricultural production. Findings suggest, however, that this trade distorting effect is less than previously coupled payments.

Suggested Citation

  • Peter Howley & Trevor Donnellan & Kevin Hanrahan, 2009. "The 2003 CAP reform: Do decoupled payments affect agricultural production?," Working Papers 0901, Rural Economy and Development Programme,Teagasc.
    • Handle: RePEc:tea:wpaper:0901
    as

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    File URL: http://www.teagasc.ie/rural-economy/downloads/workingpapers/09wpre01.pdf
    File Function: First version, 2009
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    References listed on IDEAS

    as
    1. Chantreuil, Frédéric & Levert, Fabrice & Hanrahan, Kevin, 2005. "The Luxembourg Agreement Reform of the CAP: an Analysis Using the AG-MEMOD Composite Model," 89th Seminar, February 2-5, 2005, Parma, Italy 232590, European Association of Agricultural Economists.
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    3. Gary Adams & Patrick Westhoff & Brian Willott & Robert E. Young, 2001. "Do “Decoupled” Payments Affect U.S. Crop Area? Preliminary Evidence from 1997–2000," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(5), pages 1190-1195.
    4. Swinbank, Alan & Tranter, Richard B., 2005. "Decoupling EU Farm Support: Does the New Single Payment Scheme Fit within the Green Box?," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 6(1), pages 1-15.
    5. Nigel Key & Ruben N. Lubowski & Michael J. Roberts, 2005. "Farm-Level Production Effects from Participation in Government Commodity Programs: Did the 1996 Federal Agricultural Improvement and Reform Act Make a Difference?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(5), pages 1211-1219.
    6. C. Edwin Young & Paul C. Westcott, 2000. "How Decoupled Is U.S. Agricultural Support for Major Crops?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(3), pages 762-767.
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    Cited by:

    1. Murphy, Geraldine & Meredith, David, 2015. "A typology of cattle farmers in Ireland: An overview of data, method and indicators," 2015 Conference, August 9-14, 2015, Milan, Italy 212518, International Association of Agricultural Economists.

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