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Assessing the 2003 CAP Reform: Sensitivity to the Decoupling of Agenda 2000 Direct Payments

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  • Gohin, Alexandre
Abstract
The European Union decided in June 2003 a new reform of its farm policy with a new step toward the decoupling of farm income support instruments. Available impact studies find that this reform will reduce production incentives, substantially for beef and to a lesser extent for arable crops. All these studies assume that the Agenda 2000 arable crop direct payments are already mostly decoupled while beef premiums are much more linked to production. Our main objective in this paper is to test the sensitivity of these results to this questionable modelling of Agenda 2000 direct payments which neglects eligibility rules and land market imperfections. Our analysis reveals that the negative effects of the reform on both arable crop and beef production are not sensitive to the modelling of Agenda 2000 direct payments. On the other hand, our analysis shows that, when the eligibility rules and land market imperfections are acknowledged, the decoupling effects may be much higher on the arable crop markets than on the beef markets. Policy implications of these results are finally derived.

Suggested Citation

  • Gohin, Alexandre, 2006. "Assessing the 2003 CAP Reform: Sensitivity to the Decoupling of Agenda 2000 Direct Payments," Working Papers 18868, TRADEAG - Agricultural Trade Agreements.
    • Handle: RePEc:ags:tragwp:18868
    DOI: 10.22004/ag.econ.18868
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    References listed on IDEAS

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    Cited by:

    1. Esther Boere & G. Cornelis van Kooten, 2015. "Reforming the Common Agricultural Policy: Decoupling Agricultural Payments from Production and Promoting the Environment," Working Papers 2015-01, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
    2. Esposti, Roberto, 2008. "Reforming The Cap: An Agenda For Regional Growth?," 109th Seminar, November 20-21, 2008, Viterbo, Italy 44868, European Association of Agricultural Economists.

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