Tag: direct payments

The European Commission’s July 2025 Multiannual Financial Framework proposal introduces structural changes to the Common Agricultural Policy (CAP) for the 2028–2034 programming period, raising questions about its alignment with the environmental ambitions of the Green Deal. This paper uses the spatially explicit partial equilibrium model GLOBIOM to assess how the proposed policy shifts alter production incentives and land allocation across EU Member States. We operationalise the reform by linking regional budget envelopes with unit payment rates for the key interventions, including the degressive area-based income support corridor, the consolidated Agri-Environmental and Climate Action (AECA) framework, and expanded coupled income support. Testing Member State implementation strategies ranging from fiscal minimisation to high environmental ambition, we quantify impacts on agricultural production, prices, trade, and greenhouse gas emissions, explicitly capturing the quantity-rationing effects of binding budget constraints. Results show that the aggregate 15% budget cut translates into heterogeneous impacts across instruments and Member States, that payment rate equalisation is the reform’s primary redistributive mechanism, and that without practice conditionality the environmental gains of even ambitious green implementation remain limited.

This paper investigates the effect of instruments of agricultural policy support and marketing contracts on the farm income distribution in Kosovo. Unconditional quantile regression was employed allowing for heterogeneity in preferences and risk aversion. The empirical results indicate that several policy measures and some attributes of marketing contracts exacerbate income inequality. Direct payments and more detailed marketing contracts favour disproportionally the higher income farms. Investment subsidies and improved buyers’ compliance with the terms of marketing agreements, on the other hand, are most beneficial to the lower income farmers and thus can result in more equitable farm incomes distribution. The large share of direct payments in the present agricultural budget in Kosovo is therefore misplaced since it uses scarce public resources without improving the situation of small low-income farms.

Following a transition year, the new Common Agricultural Policy period, starting in 2015, is expected to bring a number of major changes in the payment scheme of Pillar 1. Using the example of the Austrian small ruminant sector (sheep and goats), this paper describes the effects of an area-based payment scheme instead of the Single Farm Payment Scheme applied previously. The calculations are based on the specifi cation and simulation of seven different farm models and on an analysis of the Austrian Integrated Administration and Control System data sets. The results of both analyses suggest redistribution effects in favour of less extensive farm management systems. However, farms with high single farm payments per hectare are expected to face big cuts in direct payments by 2015. To avoid hardship the amount of the payments will be gradually amended over the coming years until 2019.