1. Research and Teaching Fellow, GEM Sciences Po, Paris, France, and Goethe University, Frankfurt am Main, Germany.
2. On the farm income and support distribution issue, see Allanson and Hubbard (1999), Butault and Lerouvillois (1999), Butault, Chantreuil and Dupraz (2002), and Chatellier, Colson and Daniel (2004).
3. On the effective targeting issue of agricultural policies, see OECD (2007).
4. “Income support, which depends almost exclusively on price guarantees, is largely proportionate to the volume of production and therefore concentrates the greater part of support on the largest and the most intensive farms. So, for example, 6% of cereals farms account for 50% of surface area in cereals and for 60% of production; 15% of dairy farms produce 50% of milk in the Community; 10% of beef farms have 50% of beef cattle. The effect of this is that 80% of the support provided by FEOGA is devoted to 20% of farms which account also for the greater part of the land used in agriculture. The existing system does not take adequate account of the incomes of the vast majority of small and medium size family farms.” Communication of the Commission to the Council, COM(91)100 The Development and Future of the CAP, Reflections Paper, Brussels, 1 February 1991.
5. In parallel, support creates an incentive for inefficient farmers to stay in the agricultural sector - and to continue or not to produce with decoupled subsidies. This trend may reduce the concentration of holdings. Also, the capitalisation of support into the agricultural land prices slows down structural adjustments. Increasing flexibility in labour, land and capital market may reduce the magnitude of such barriers.
6. According to Garzon (2006), the increases in per-hectare payments accompanying wheat price reductions and in headage payments accompanying beef price reductions were reduced from 100% of the difference between the old and new prices to 50% and 80% respectively. The milk price decrease was compensated at 65%, with a direct payment coupled to the size of quota.
7. The reference period for computing entitlement values refers to the three-year period 2000-2001-2002.
8. The United Kingdom defined 6 regions: England (moorland), England (handicapped areas), England (others), Northern Ireland, Scotland, and Wales.
9. The 2009 CAP Health Check updated Article 69, which became Article 68 along with new modalities.
10. Article 69, Council Regulation No. 1782/2003 of 29.09.2003.
11. New member states are excluded from financial discipline and modulation mechanisms during the phasing in period for direct payments, which ends in 2013 (2016 for Bulgaria and Romania).
12. The CAP Health Check refers to the political agreement adopted on 20 November 2008 and three related regulations: Council Regulation (EC) No. 72/2009 of 19 January 2009 on modifications to the Common Agricultural Policy, Council Regulation (EC) No. 73/2009 of 19 January 2009 establishing common rules for direct support schemes for farmers under the common agricultural policy and establishing certain support schemes for farmers, and Council Regulation (EC)
No. 74/2009 of 19 January 2009 amending Regulation (EC) No. 1698/2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD).
13. Council Regulation (EC) No. 74/2009 of 19 January 2009 amending Regulation (EC) No. 1698/2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD).
14. This amount considers EUR 130 million of new support which will result from unspent direct payments. As a matter of fact, Article 68 allows new spending without any further individual charging. In France, this will cover the establishment of a risk mutual fund (EUR 40 million, from 2011, objective iii) and support for crop rotations (EUR 90 million, only in 2010, objective iv).
15. Since rural development measures are co-funded by member states, the increased amount devoted to the Pillar 2 of the CAP will induce an increase in national spending. Hence, the EU and French budgets will contribute to the extra EUR 321 million with EUR 221 and 100 million respectively.
16. The same methodology has been employed by Trouve and Berriet-Solliec (2008), who analyzed the distribution of support from the CAP’s Pillar 2 in view of the European objective of cohesion. Based on data from 56 European regions, they find that Pillar 2 fails to achieve both inter and intraregional cohesion. They conclude that the increasing influence given to regions in implementing the CAP reinforces this inconsistency. By contrast, the originality of the present analysis consists of 1) using data at the French departement level, which reflects the administrative level of French direct payment implementation and 2) considering decoupling support in France and the latest CAP adjustments. Shucksmith, Thomson and Roberts (2005) evaluate the territorial impact of the CAP and rural development policy (ESPON project). They suggest that Pillar 1 expenditures go to EU15 richer regions because of their large farms, location and farm type. These are inconsistent with economic cohesion objectives whereas Pillar 2 of the CAP is more consistent with cohesion objectives within Member States, though not between them.
17. On the long-term challenges that face European agriculture along with the need for new public and private policies, see Boulanger and Messerlin (2010).
18. On European aggregate measurement of support reduction, see Jean, Josling and Laborde (2008). For a global overview of WTO disciplines of agricultural support, see Orden, Blandford and Josling (2011).
19. This Report (European Commission, 1997) made clear that the CAP has to continue to move away from sector-based policy which distorts agricultural commodity markets towards a territorially defined and integrated policy which remunerates public goods and amenities resulting from agricultural activities.
20. For instance, an unexpected joint position paper on the future of the CAP from the European Landowners’ Organisation and Birdlife International was released in January 2010; and a proposal paper gathering together 15 French environmental and development NGOs (Groupe PAC 2013) was published in February 2010.
21. For instance, during the CAP Health Check negotiations, the FNSEA (the largest French farmers’ union) was split between financial losers and winners, i.e. crop and livestock producers.