The project has received funding from the European Union.

The Dilemma of Targeting Support with CAP post 2013

Tata, 22-24 April, 2010

Wanda Chmielewska-Gill

Foundation of Assistance Programmes for Agriculture FAPA

Agricultural Policy Analysis Unit, Warsaw

Needs of the Sector Heavy dependence on public support Growing volatility difficult to manage - in prices and costs - desease and weather related Burden of regulation on farming sector R&D needs - to revive faltering productivity growth - to reduce negative environmental impacts NMS- to catch up Diversity within and between MS extent of CAP help Europe’s agriculture is unsustainable economically, but

has good natural conditions to produce.

Targeted policy

Policy measure that targets specific

outcomes, populations or areas. It requires:

- identification of target actions,

- target groups,

- target area.

(OECD)

Implementing targeted payments

Contract with a farmer

Clearly defined objectives

Period of time (5-10 years)

Cannot be inherited

Effects measured (control)

Auctions can work under specific contitions

Not all farmers would receive payments

Transaction costs can be high.

Costs and benefits of target policy

Targeted policy

Transfers to specific objectives

Significant implementation costs

Adjusted to costs

Broad based policy

Transfer per hectare or per farm, per product

May be simple/cheap

Not adjusted. Overcompensation influences land prices.

Land prices (eur/hectare)

Eurostat, RIAE Bulletin, 2007

Targeting helps competitiveness if it affects:

Investment improving efficiency,

income diversification,

Investment into human capital,

Investment into value added

(processing, marketing),

Investment into cost reductions.

Support for agriculture in selected New Member States in years 1986-2003 compared the UE (PSE)

OECD

1,492,022,09

1,700,80

0,44

-0,33-0,38-0,53-2

0

2

4

6

8

10

12

2000 2001 2002 2003 2004 2005 2006 2007 2008

Eksport

Import

Saldo

Polish agri-food trade with the World (in bn EUR)

Targeting in 1 Pillar

85% of SPS funds go to the 17% of farmers who

have 80% of land (Agra Europe Weekly, 6 March

2009).

- Capping

- Modulation

- Zoning instead of contracts?

Targeting 2 Pilar easier

Conclusions

Slow changes towards targeted instruments

in the present CAP, particularly in RDP;

Not everybody will get support;

More efficient than present instruments

Keeps land prices lower;

Difficult and costly to implement.