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The CAP Health Check in France: A significant redistribution of payments?

Vincent Chatellier and Herve Guyomard1

This chapter presents an analysis of the consequences of the implementation, in France, of the Health Check of the Common Agricultural Policy (CAP). The simulations, conducted with the Farm Accountancy Data Network (FADN), demonstrate a shift of direct payments in favour of extensive grazing farms, mainly those with a high proportion of pasture in their rotation. By contrast, crop farms and farms with intensive production of cattle are losers. The redistribution of direct payments permitted through modulation and Articles 63 and 68 of the European Council (EC) Regulation is favourable to disadvantaged areas, particularly mountainous areas. This change in the CAP is moving towards increased standardization of the amount of decoupled payments per hectare. In addition, it promotes a more focused allocation of resources for the protection of natural resources and compensation for environmental and territorial services.

The Common Agricultural Policy (CAP) has been subject to a continuous process of revision since 1992 (Borzeix et al., 2006; Bureau, 2007), and was again reformed on 20 November 2008 (European Council, 2009). Another step was thus taken in the course set in the early 1990s, which can be summarized as follows: progressive dismantling of direct price support (Butault, 2004); compensation for lost income through direct payments that are increasingly disconnected from current agricultural production (a process known as the decoupling of direct Pillar 1 payments); granting of direct Pillar 1 payments made contingent on compliance with directives and regulations and on maintaining the land in good agricultural and environmental condition (GAEC) (conditionality constraint); and simultaneously increasing environmental aid (especially in the form of agri-environmental measures) and territorial aid (primarily in the form of compensatory payments for natural handicaps). These Pillar 2 payment programmes are funded with resources diverted from Pillar 1 on a “communicating vessels” principle (a process known as modulation).

The Community decisions adopted on 20 November 2008 were the outcome of a political compromise providing member states with considerable leeway in terms of domestic implementation (European Council, 2009). In the case of France, the decisions were handed down by the Minister responsible for agriculture on 23 February 2009 (Ministry of Agriculture and Fisheries, 2009). In this context, this paper is divided into three sections. The first recapitulates the principal decisions made at the Community and domestic levels in the framework of the CAP Health Check. This is necessary for understanding the new Community regulations on agricultural support as well as subsequent domestic decisions. The second section details methodological elements explaining the rationale of this study. It presents, in the following order, the data source (the Farm Accountancy Data Network, or FADN), the method for classifying agricultural holdings on the basis of farm type and geographical zone, and the assumptions underlying our simulations of the CAP Health Check. The third section describes the economic impacts for French farms of the legislation passed on 23 February 2009.

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