Income Distributional Effects of Decoupled Payments: Single Payment Scheme in the European Union
In: Factor Markets Working Paper No. 29, July 2012
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In: Factor Markets Working Paper No. 29, July 2012
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In: American Journal of Agricultural Economics, Band 91, Heft 1, S. 1-18
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After an extended process of reform the European Union has introduced direct payments to farmers which are decoupled from production decisions as a central element of its Common Agricultural Policy. They are also referred to as Single Farm Payments. In this paper we analyze the production and trade effects of this policy and its compatibility with WTO international trade rules. A survey of the literature suggests that the system of direct payments in its present form has effects which are analogous to a subsidization of agricultural land. Thus, they act to increase production and trade. Furthermore we quantify the total economic cost of production of selected commodities in the European Union and compare them to the price at which EU production is sold in foreign markets. Our analysis suggests that the costs of production in the European Union for key agricultural commodities are below international prices. It can be established that commodities for which the European Union is a net exporter are sold below cost, for extended periods of time and in substantial quantities. The EU system of decoupled payments to farmers, thus, acts to inflict economic injury to third countries. Under WTO rules, dumping can only occur when a country is an exporter. In this paper we demonstrate that on the markets included in the analysis dumping occurs on the market for wheat. The extent of injury is exemplified for Australia. ; Im Zuge des Reformprozesses der Gemeinsamen Agrarpolitik der Europäischen Union wurden als zentrales Instrument schließlich Direktzahlungen an die Landwirtschaft eingeführt, die von den tatsächlichen Produktionsentscheidungen entkoppelt sind. In diesem Beitrag wird analysiert, welche Produktions- und Handelseffekte durch diese Direktzahlungen an die Landwirtschaft verursacht werden und wie diese im Licht der WTO Handelsregeln zu beurteilen sind. Eine Auswertung der Literatur zeigt, dass die Direktzahlungen wie eine Subvention auf den Bodeneinsatz wirken und diese daher Produktionseffekte aufweisen. Darüber hinaus werden in diesem Beitrag die Produktionskosten in Deutschland für ausgewählte Agrargüter quantifiziert und mit den Weltmarktpreisen verglichen. Dabei zeigt sich, dass selbst unter sehr konservativen Annahmen die Produktionskosten oberhalb der Weltmarktpreise liegen. Bei Weizen ist die EU Nettoexporteur und erfüllt daher die WTO Kriterien für Dumping. Der Umfang der ökonomischen Kosten dieser Politik bei Weizen wird am Beispiel Australiens quantifiziert.
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This paper analyses the distributional effects of decoupled Single firm Payments (SFP) in the European Union. In a static world the SFP benefit only firmers, irrespective of the implemented SFP model and irrespective of whether entitlements are tradable or not, except when the size of the allocated entitlements is larger than the eligible area and/or if entrants are eligible for the SFP. Then the SFP gets either partially or fully capitalized into land values and landowners benefit. In a dynamic world the effects depend on the nature of structural change, on the tradability of entitlements, and on the implementation model.
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In: American Journal of Agricultural Economics, Band 94, Heft 1, S. 52-66
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In: Land use policy: the international journal covering all aspects of land use, Band 112, S. 105829
ISSN: 0264-8377
In: American Journal of Agricultural Economics, Band 88, Heft 1, S. 73-89
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Decoupled direct payments were introduced in the European Union (EU) by the 2003 CAP reform in form of the Single Payment Scheme (SPS) and the Single Area Payment System (SAPS). The 2013 CAP reform changed both the implementation of decoupled payments as well as its budget. We assess the possible effects of the 2013 CAP reform on the capitalization of decoupled payments in land rental values. Our estimates suggest that the CAP reform leads to an increase in the capitalization of decoupled payments by additional 16 cents for each EUR of decoupled payments relative to the pre-reform situation. However, there is a relatively large variation in the reform effects between MS particularly between Old Member States (OMS) and New MS (NMS). In NMS the capitalization rate slightly reduces from 76% in the pre-reform period to 72% in the post-reform period. Although, the rate is significantly lower in OMS, it almost doubles (from 20% to 39%) due to the reform. The main source of the post-reform capitalization in the EU are the entitlement stock changes accounting for 19% of total post-reform capitalization level, followed by the internal convergence of payments with 18%, the budget change (including external convergence) with 1%, and the differentiation of payments (redistributive payment) with -7%. Overall, our estimates suggest that on average in the EU, the non-farming landowners' policy gains are 25% of total decoupled payments in the post-reform period compared to 17% in the pre-reform period.
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In: A bond scheme for common agricultural policy reform, S. 1-3
The production stimulating impact of agricultural subsidies has been a well-debated topic in agricultural policy analysis for some decades. In light of the EU reform of the Common Agricultural Policy (CAP) in year 2005 in which agricultural subsidies were decoupled from current production decisions and the modification to this payment in 2015, this study investigates the impact of decoupled payments under these two reforms on livestock production in Northern Ireland. The study uses a farm-level panel dataset covering 2008&ndash ; 2016 period and employs an instrumental variable fixed effect model to control for relevant sources of endogeneity bias. According to the empirical results, the production impacts of decoupled payments were positive and significant but with differential impacts across livestock production sectors, suggesting that decoupled payments still maintain a significant effect on agricultural production and provide an indication of the supply response to changes in decoupled payments.
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In: American Journal of Agricultural Economics, Band 92, Heft 3, S. 849-858
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In: American Journal of Agricultural Economics, Band 99, Heft 3, S. 773-782
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In: Issues in Environmental Science and Technology; Sustainability in Agriculture, S. 66-80
In: American Journal of Agricultural Economics, Band 88, Heft 2, S. 393-408
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In: Review of agricultural economics: RAE, Band 30, Heft 1, S. 27-42
ISSN: 1467-9353