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Home arrow Economics arrow Disaggregated impacts of CAP reforms : proceedings of an OECD workshop.

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Conclusions

The distribution of farm support has to be considered in view of policy objectives. Equity is an important factor in ensuring that public support goes to holdings which need or deserve it. This is not a goal in itself, but is closely linked to the objective of the public policy implemented. On the one hand, equity matters if the objective is to support farm incomes. Since decoupled payments are labelled within the EU regulations as income support, equity is relevant as regards the distribution of SFPs. On the other hand, equity matters less if the objective is to pay for positive externalities, public goods or nonmarket commodities generated by farm activities — since the more externalities are provided, the more public support may be legitimised. Finding a European consensus on the objectives of a renewed CAP appears crucial here.17

Breaking the linkage between the amount of support received and the market- commodity dimension which could result from present (and past) farming activity is however a prerequisite. This rupture remains the core challenge in direct payment improvement since the 1992 reform (Mahe and Roe, 1996). From 2010 on, less than 20% of French direct payments — entirely supported by the EU budget — are targeted in the light of recent policy objectives. The CAP remains a sector-based redistributive policy which tends to slow down structural adjustments and suffers from weak low-income targeting (OECD, 2003). As a result, in spite of marginal adjustments resulting from the CAP Health Check, equity continues to be a burning topic which is deferred to national discretionary decisions.

One should acknowledge the new political economy of the rationale for and distribution of direct payments (Josling and Tangermann, 2009). The 1992 and 2003 market-oriented reforms resulted from persistent external pressures. Hence, after almost two decades of policy improvement, the EU benefits to an impressive degree as regards expected internal support concessions to be made within the Doha Round, if one believes that EU SFPs respect green-box criteria. Hence, reform of the direct payment system for the post-2013 period is mostly pushed by internal considerations — in line with the 1997 Buckwell Report.19 One should take into account that the motivation of direct payments has to shift from income to amenity support. A sector-based income policy does not appear relevant at the European Union level, and nor does a policy which remunerates local amenities. These raise subsidiarity, and budgetary, issues which exacerbate national authority trade-offs, and involve a widening number of stakeholders from environmental, pro-development, consumer or taxpayer groups. This leads to the formation of broad civil-society alliances or unexpected coalitions20 on CAP reforms, whereas farmers’ unions appear divided with internal tensions and a declining number of adherents. Public support provided on the scale of a heterogeneous EU is not sustainable without clear acceptance by society. This new political environment is strengthened by the increasing political power bestowed on the European Parliament, i.e. co-decisionmaking on CAP issues from 2010 onwards. When setting up the post-2013 CAP, equity will still be a major political matter, especially if one considers that the rationale (and related distribution) of EU direct farm payments has to shift from income to amenity support.

 
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