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Quantifying the impact of partial decoupling

The previous analysis has highlighted the potential implications of partial decoupling on prices, production and revenues. However, a number of factors make quantifying the actual impact from available statistics challenging. These include: the relatively short period since implementation; the staggered nature of implementation across countries and sectors; and the complexity of capturing the impact of other key drivers (for example, the food price spike of 2008).

Detailed analysis of production changes since the introduction of decoupling has been undertaken by Thomson et al. (2009) using FADN data. The results of this analysis highlight few distinct differences in production trends between those countries that fully decoupled and those that did not. The one exception appears to be in the beef sector where there is a divergent trend emerging between France who maintained the maximum allowable degree of coupling and countries such as the United Kingdom and Germany who fully decoupled.

The potential complexity of the issues involved and the lack of long-run data on the impact of partial decoupling support the use of an approach that, whilst taking account of up-to-date data, is able to simulate the development of markets within the European Union over time with and without decoupling. Therefore the approach adopted is to use a well recognised partial equilibrium model (the CAPRI model) to consider the development of agricultural markets up to 2013 (the end of current policy period) and to examine the impacts on production, prices and revenues. The next section briefly describes the key features of the model.

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