DISTRIBUTIONAL AND INCOME EFFECTS OF DIRECT PAYMENTS UNDER THE NEW CAP – THE CASE OF GERMANY
Journal Title: Zagadnienia Ekonomiki Rolnej - Year 2014, Vol 340, Issue 3
Abstract
The CAP post 2013 was a success in terms of maintaining the budget of public transfers in favour of farmers, but is without clear orientation wrt a more efficient use of public funding and future societal goals, as well as not regarding the changing conditions of agricultural markets. The two years of negotiation ended in a consensus of a bundle of measures going forwards or backwards compared former CAP’s and with manifold options of national implementation. Administrative burdens will become more important as previously. Germany is an example of in-time implementation of the CAP reform measures, and also a leader in implementing principles of decoupling. The move from historical towards regional entitlement levels has been implemented in the previous two reforms, whilst other Member States are obliged to do that under the New CAP, although significant redistribution effects occur. Although the first hectare premiums are critically discussed by German Economists (top agrar, 2014) there are good reasons to balance the effects between the former and the New CAP between size classes (Kleinhanss, 2012). The Young Framers’ scheme has some regional distribution effects, but much less than would be with the implementation of Grassland and Grazing Livestock premiums on disadvantaged regions. To avoid this, AMK finally decided upon a global Pillar-I budget transfer to Pillar-II and determination on measures entirely under the authority of the Länder. Finally, the New CAP will have rather moderate negative income effects. Unresolved are the effects of CAP on land rental prices. There are clear indicators that the significant rise of rental prices is influenced by decoupling, especially the transparency coming-in by the regional entitlements. Other factors are the rise of agricultural commodity prices especially for crops, but also the heavy subsidization of bio-energies as biogas and bio-fuels based on national policies.
Authors and Affiliations
Werner Kleinhanss
Keywords
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