Home Economics Disaggregated impacts of CAP reforms : proceedings of an OECD workshop.
An interesting policy question in the light of continued CAP reform is what implications a bond-type scheme would have for land use, and in particular for the area of land which becomes not profitable for agricultural production and which we assume becomes abandoned. Table 1.2 shows developments on the modelled land market as a result of introduction of the BOND scenario in 2005. It can be seen that the large numbers of farms that exit the sector in 2005 release significant areas (i.e. > 10%) of land to the land market in all regions except Brittany. Even farms remaining in the sector release land in this scenario, mainly in the form of grassland due to a decline in beef and milk production. However, this does not translate into equivalent areas of abandoned land. As shown in the row “Land rented by other farms” in Table 1.2, remaining farms are able to take advantage of the greater volume of land released to the land market to increase farm size (Figure 1.5). Nevertheless, the bond scenario leads to abandonment of land, principally grassland, and in particular in Hohenlohe and Jonkoping. In the other regions, remaining farms continue to manage 89-99% of all land.
Note that even more land would have been abandoned in Jonkoping if it were not for agri-environmental schemes which were sufficient to ensure that around 50% of the area of semi-natural grassland was preserved. The existence of national support in Vasterbotten (which otherwise has similar production conditions to Jonkoping) - coupled primarily to milk production at 0.10 EUR/kg - was sufficient to buffer most effects of the bond. Hence, in evaluating the effects of CAP reform, it is important to consider the implications of interactions with Pillar 2 policy instruments. Obviously, the wide-scale land abandonment in Hohenlohe and Jonkoping is likely to be negative for landscape value and biodiversity (Brady et al., 2009).
Table 1.2. Farms quitting, area released and area left idle due to introduction of a bond scheme in 2005 compared to 2004
Source: Sahrbacher et al. (2007).
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