Our estimates are designed to evaluate the economic impact that changes to the method for allocating direct payments resulting from the decrees passed on 23 February 2009 will have on farms. This impact is measured against the reference situation (historical model), with all other factors being held constant, i.e. no allowance is made for farmers adapting their production to the new situation or for productivity gains, which vary across the categories of farming operations (Butault, 2006). Similarly, movements in output prices (Gohin and Latruffe, 2006) and/or factors of production are not taken into consideration, regardless of whether they are caused by the decisions or are exogenous.
The impact of measures identified by the CAP Health Check is evaluated in euros per farm and/or as a percentage of total direct payments (Table 10.3) and/or income.5 In recognition of the wide fluctuations in the prices of agricultural produce in recent years (especially cereals and dairy products), the impact of the budgetary redistribution is reported as a five-year average (period 2003-07, in constant 2007 EUR). It is important that this impact, expressed as a percentage of revenues, be discussed from the standpoint of final income. In the same vein, depending on the type of farm, the sometimes extensive use of hired farm labour may have the effect of creating a significant gap between farm income and family income (Table 10.4).
First, the simulation evaluates the economic impact on each farm of the disbursements under Article 63 (EUR 760 million, of which EUR 630 million are in direct payments for cereals, oilseed and protein crops and EUR 130 million for livestock premiums6) and under Article 68 (estimated at EUR 390 million) and the increase in the modulation rate (estimated at EUR 310 million nationwide). Evaluation of the budgetary appropriation posed no particular challenges, since the item “Subsidies” in FADN makes it easy to identify the amount of the single payment and of the coupled aid that will be decoupled in 2010.
Second, for each of the 13 expenditure items, the simulation assigns to every farm values that sum to EUR 1.26 billion (of which EUR 36 million are from the domestic contribution). The assumptions used to apportion these funds should by no means be construed as a prediction of the decisions that will finally be forthcoming from the task forces established by the Minister of Agriculture, whose mandate is to provide details regarding the technical application of the mechanisms decided upon.
Table 10.3. Level of direct payments per farm EUR, 2007
Arable
crops
Milk
cows
Beef
cows
Sheep and goats
Pigs and poultry
Wine
Others
Total
Alsace
27 500
34 700
N/A
N/A
N/A
1 900
N/A
18 700
Aquitaine
24 000
27 100
25 200
14 700
N/A
2 900
8 700
17 700
Auvergne
34 300
29 200
42 100
24 400
N/A
N/A
N/A
34 300
Basse-Normandie
30 500
30 200
33 100
N/A
N/A
N/A
2 600
30 100
Bourgogne
49 000
53 300
47 400
N/A
N/A
2 300
N/A
38 600
Bretagne
12 600
27 100
24 600
N/A
10 600
N/A
8 200
21 900
Centre
45 000
47 600
49 700
33 100
N/A
4 000
5 900
41 500
Champagne-Ardennes
57 800
59 800
50 400
N/A
N/A
1 900
N/A
34 900
Corse
N/A
N/A
28 700
20 700
N/A
5 200
17 800
21 000
Franche-Comte
36 900
31 300
38 000
N/A
N/A
900
N/A
30 400
Haute-Normandie
42 700
41 800
44 400
N/A
N/A
N/A
N/A
40 300
Ile-de-France
55 100
N/A
N/A
N/A
N/A
N/A
4 000
50 100
Languedoc-Roussillon
29 300
27 500
44 700
30 000
N/A
5 500
7 000
13 000
Limousin
N/A
31 600
35 900
25 100
N/A
N/A
N/A
34 200
Lorraine
46 200
51 100
50 100
N/A
N/A
N/A
N/A
49 600
Midi-Pyrenees
31 100
28 900
34 700
27 900
N/A
6 500
9 600
29 000
Nord-Pas-de-Calais
22 200
33 100
34 600
N/A
N/A
N/A
N/A
29 100
Pays de la Loire
26 300
31 800
35 200
N/A
N/A
1 700
7 400
28 700
Picardie
53 100
51 700
60 100
N/A
N/A
N/A
N/A
51 200
Poitou-Charentes
37 400
52 100
42 500
29 400
N/A
8 000
3 400
33 100
PACA
22 800
N/A
N/A
45 800
N/A
2 400
4 300
13 100
Rhone-Alpes
21 200
25 600
32 400
21 100
N/A
1 500
7 800
20 800
France
36 200
33 700
37 800
27 000
8 000
3 500
6 500
28 900
N/A: Not representative. Source: AGRESTE - RICA France 2007 / INRA SAE2 Nantes calculations.
Table 10.4. Current revenues before income taxes per family farm job EUR, average over five years
Arable
crops
Milk
cows
Beef
cows
Sheep and goats
Pigs and poultry
Wine
Others
Total
Alsace
24 500
20 900
N/A
N/A
N/A
N/A
31 900
26 400
Aquitaine
15 800
14 600
12 100
7 100
7 100
N/A
17 100
14 500
Auvergne
21 200
13 600
20 300
7 000
7 000
N/A
N/A
16 100
Basse-Normandie
28 000
19 200
17 200
N/A
N/A
N/A
N/A
19 300
Bourgogne
31 700
22 400
21 100
N/A
N/A
N/A
35 700
26 200
Bretagne
18 600
21 600
18 900
N/A
N/A
18 600
N/A
20 700
Centre
35 600
24 100
26 600
14 100
14 100
N/A
31 400
30 300
Champagne-Ardennes
46 400
28 200
29 600
N/A
N/A
N/A
119 700
66 200
Corse
N/A
N/A
19 300
16 700
16 700
N/A
23 500
17 300
Franche-Comte
20 500
18 500
20 400
N/A
N/A
N/A
61 200
19 500
Haute-Normandie
29 800
25 600
23 700
N/A
N/A
N/A
N/A
25 700
Ile-de-France
44 300
N/A
N/A
N/A
N/A
N/A
N/A
38 900
Languedoc-Roussillon
13 200
15 600
20 900
14 700
14 700
N/A
7 300
11 700
Limousin
N/A
17 400
19 700
12 000
12 000
N/A
N/A
18 800
Lorraine
31 300
24 300
24 600
N/A
N/A
N/A
N/A
24 800
Midi-Pyrenees
15 400
15 100
16 000
11 400
11 400
N/A
6 600
14 700
Nord-Pas-de-Calais
23 400
22 600
23 100
N/A
N/A
N/A
N/A
22 300
Pays de la Loire
26 900
20 200
21 300
N/A
N/A
N/A
18 000
21 100
Picardie
36 500
27 300
28 100
N/A
N/A
N/A
N/A
34 000
Poitou-Charentes
30 200
25 700
23 400
19 000
19 000
N/A
49 100
29 300
PACA
17 900
N/A
N/A
14 400
14 400
N/A
24 600
20 900
Rhone-Alpes
18 500
16 500
13 700
13 800
13 800
N/A
19 700
17 500
France
27 300
20 400
19 400
13 400
13 400
18 100
34 000
22 700
• As to the EUR 700 million of direct payments allocated to grasslands, our choices for the simulations are particularly pertinent because this is a key element of the reallocation of funding. In keeping with statements made in a speech by the Minister of Agriculture, the areas eligible for this premium include permanent pasture and temporary pasture deemed “productive”. However, not all productive grassland areas are treated equally under this new aid. Specifically, areas are accounted for differently depending on the farm’s stocking density (expressed here in terms of head of grazing livestock per hectare of primary forage area, where roadways are included in forage areas) and the farm’s total area of pasture (up to 50 hectares per farm). Also, the pastures of farms with a stocking density below 0.5 are automatically disqualified from receiving the aid. In operations with a stocking density between 0.5 and 0.8, these areas are counted, but are weighted with a coefficient that increases linearly from 0.625 when the density is 0.5 to 1 when it reaches 0.8. On farms in which the stocking level exceeds 0.8, pasture is fully counted. The maximum level of aid applies to the first 50 hectares, with the remaining pasture counted at 50%.
• As to the EUR 30 million assigned to fodder, this support takes the shape of per-hectare payment for all fodder crops (except temporary pasture) - principally fodder maize, but also fodder beets, fodder cabbage/kale, etc. The amount of payment per hectare (approximately EUR 20) is uniform across France.
• As to the EUR 30 million assigned to potato and vegetable crops, the aid allocation to farms is proportional to the area planted.
• As to the EUR 135 million assigned to the sheep and goat sector, the envelope was first split into two parts in proportion to the sizes of the suckler and dairy ewe and goat populations; only goats in mountain and high mountain zones and in Corsica were included in this calculation. The envelope assigned to sheep (estimated at EUR 131.6 million) was then distributed as (coupled) aid per head of ewes; and similarly for goats (EUR 3.4 million). In addition, the simulation accounts for an increase in the amount of the single farm payment for sheep farms that will take effect in 2009 (EUR 25 million).
• As to the EUR 45 million allocated to dairy operations in the high mountain, mountain, and Piedmont zones, aid is distributed on up to a maximum of 100 000 kg of milk per farm, with consideration given to the transparency of the GAEC (typical French association of farmers). This threshold was established to reflect the ceiling on payments of this new aid to each farm.
• As to the EUR 8 million earmarked for the production of durum wheat in traditional zones, the amount of aid is determined per hectare at a rate that is uniform across the farms in these zones.
• As to the EUR 4.7 million earmarked for suckling calves, the amount of aid reflects the number of head on a uniform basis. To better target this very specific population, only regions in the great basin in south-western France (i.e. the traditional zones of production) are eligible for this new aid.
• As to the EUR 42 million allocated to supplement the compensatory allowance for permanent natural handicaps, the simulation assumes that only the first 25 hectares are eligible.
• As to the EUR 40 million assigned to the protein crop sector, we extrapolate that this support will be distributed in the form of a per-hectare aid to farms that had land under these crops in 2007. This choice was made necessary by the fact that it is difficult to identify farms that will immediately switch to growing these crops following the introduction of earmarked aid.
• As to the EUR 57 million allocated to promoting organic agriculture, we opted for a lump-sum and uniform premium. This premium is available to farms currently involved in organic farming or converting to it. An alternative to this option, payment of a per hectare premium, would tend to skew production toward larger farms at the expense of those operating on a smaller scale (such as organic vegetable farming).
• As to the EUR 32 million allotted to “new challenges”, support is distributed in the form of supplemental aid classified as “other direct agri-environmental aid” under FADN (excluding the agri-environmental grass premium). As in the case of protein crops, it is difficult to predict what farms will take this route.
• As to the EUR 100 million allocated to supporting crop insurance, the funds are allocated on the basis of the value of plant production. Here again, it has proved impossible to speculate on whether farmers will opt for these insurance contracts immediately. They will incur additional expenses if they sign on.
• As to the EUR 40 million allotted to the health fund, the support is allocated on the basis of the value of animal production.
The amount of the budgetary appropriations exceeds the total 13 expenditure items by EUR 223 million. The excess is used to fund prior commitments, in particular the Community’s contribution to the agri-environmental grass premium.