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A new coupling rationale

Roughly nine tenths of direct payments may be decoupled by the time of an eventual 2013 reform. The French authorities had originally decided on a territorial and environmental re-coupling scheme. The use of Articles 63 and 68 shows a shift in the budget towards grass-based livestock producers characterised by extensive, less-favoured areas and/or environmentally friendly farm holdings. Most of the new support is coupled either to environmental/extensive practices or to specific territories. For sheep and goat support, this coupling is indirect since its distribution tends to follow a path similar to that of agri-environmental support, as demonstrated below.

The French authorities decided to partially decouple suckler cow premiums (25%), and anticipated the full decoupling of slaughter premiums in 2010. They also decided to fully decouple the she-goat premium and to set up a new coupled and higher-valued premium with the use of Article 68. These decisions illustrate the environmental and territorial focus which the French authorities wish to grant to Pillar 1 subsidies. We use Pearson and Spearman correlation coefficients in order to provide evidence for this assertion,16 measuring the strength of distribution path considering Pillar 2 environmental and territorial support on the one hand, and Pillar 1 disaggregated subsidies on the other hand.

Table 11.5 presents unequivocal results. The distribution of direct payments coupled to suckler cows on the one hand, and to ewes and/or she-goats on the other hand follow distribution paths similar to those of environmental and territorial measures.

Table 11.5. Pillar consistency issue: the French case 2007

Pillar 1 Pillar 2

SFP

Arable crop payment

Suckler cow premium

Slaughter

premium

Ewe and/or she-goat premium

All direct payments

Environmental and territorial measures

  • -0.279***
  • -0.334***
  • -0.416***
  • -0.435***
  • 0.498***
  • 0.446***

++

Non sig. Non sig.

  • 0.726***
  • 0.656***

+++

  • -0.184*
  • -0.252**

This table presents 1) Spearman and 2) Pearson coefficients of correlation at the 10% (*), 5% (**) and 1% (***) levels of statistical significance. These coefficients measure the strength of association between two variables - but not the causality. They equate to (-1) in presence of perfect negative correlation, (0) in absence of any correlation, (1) in presence of perfect positive correlation.

We use data at the French departement level (92) which reflects the administrative level of French direct payment implementation. Data on all French (metropolitan) farm holdings are used (506,926 recipients) and not only professional holdings (335,233 recipients) in order to consider the broad spectrum of agricultural and rural actors. Pillar 2 environmental and territorial support covers compensatory allowances for natural handicaps, agrienvironmental grass premiums, sustainable agriculture and territorial management contracts, and other agrienvironmental measures. For each departement, we divide the amount of subsidy by the number of Annual Work Units (AWU) in order to take into account the income support dimension of the CAP.

Source: Data from French Ministry of Food, Agriculture and Fisheries; author's calculations.

The partial redistribution of support which results from the Health Check shows that French conservatism is progressively declining. This observation can be commented as follows.

First, a re-legitimised CAP is a way to preserve direct payments - and related EU budgetary flows. Thus, France has developed a hybrid model when attempting to renew the CAP with a strong Pillar 1 mostly through new targeted subsidies and not through common historical SFPs. Within the French historical decoupling model, the use of Articles 63 and 68 enhances a kind of uniformity in SFPs per hectare. However, one should bear in mind that less than 20% of French direct payments will be targeted in line with CAP Health Check objectives. Thus, this does not remove the need for a sound reform of the French direct payments scheme after 2013.

Second, the French authorities grant to the Pillar 1 a rural development dimension, magnifying the related responsibilities attributed to national authorities without observing the co-funding principle. This jeopardises the relevancy of CAP dichotomisation, which tends to exist only for historical and budgetary reasons. It thus confirms the sensitivities which surround the CAP and budget reforms.

 
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