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Home arrow Economics arrow Disaggregated impacts of CAP reforms : proceedings of an OECD workshop.

Farmers’ adjustment to decoupling in the EU15

According to farmers’ intentions, the introduction of decoupled payments will have little direct effect on structural change in England. Few farmers plan to modify their exit or growth decisions under SPS arrangements compared to what they would have done if they faced a continuation of Agenda 2000. Under both scenarios, the key characteristics of farmers intending to exit in the short term (defined as the next five years) were the same: elderly farmers specialised in COP production (cereals, oilseeds and protein crops) and with high value added without net current subsidies per hectare.

The more pronounced adjustment concerns production choices (even though the majority of the respondents were not planning to change their output mix, some intended to reduce their cattle herds) and to a certain extent off-farm activities. Therefore, this early empirical research suggests that in England the adjustments to the 2003 reform are likely to be subtle and to affect mainly production choices and diversification.

The French results are similar to the findings from England in that few farmers said that they intended to alter their plans to exit or grow as a result of the introduction of the SPS. Intentions are hardly affected by the switch to the SPS in France, which might be expected given the conservative manner in which France has chosen to implement the SPS. However, relatively greater adjustment is likely to be witnessed in the output mix of farms and the allocation of time devoted to off-farm work.

In Sweden, in contrast to England and France, the implementation of SPS is more likely to stimulate structural change as some farmers are planning to exit earlier than they would have done under Agenda 2000. However, very little land is likely to be abandoned, as the demand for land for farm growth persists after the change in policy. The predicted changes in production mix are also relatively strong in the Swedish case and are likely to be characterised by 1) a movement away from COP and 2) the extensification of livestock production. The Swedish farmers also intended to keep some land in GAEC without producing on it. These plans are consistent with prior expectations concerning the impact of decoupling, i.e. the use of less intensive farming practices, and reduced incentives to produce.

It became evident that farmers intended to apply a minimal adjustment strategy in response to changes in agricultural policy, at least in France and England. There is no strong evidence that farmers intended to drastically change their strategic decisions to exit agriculture. Few farmers were interested in merely keeping land in good agricultural and environmental condition (GAEC) and not producing. From this point of view, the results of our study are in line with previous studies which investigate farmers’ intentions in response to policy change (Harvey, 2000; Tranter et al., 2004; Chatellier and Delattre, 2005; Breen et al., 2005). However, results for Sweden are in contrast with this, as some farmers there intend to change their exit and growth plans, depending on the details of the policy implementation.

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